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Capital Power Corporation (CPX)
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Brookfield Infrastructure Corporation Class A Exchangeable Subordinate Voting Shares (BIPC)
Q: Somewhat unexpectedly, I will need to raise about $200,000 in the next few months. I'm trying to think through my options and would like your perspective. I can think of three approaches, perhaps there are more. I'm near retirement but employment is secure and there is no compelling reason to retire. I own a home in Toronto that has a small remaining mortgage (less than 10% of market value). No other debts.
1. sell stocks in a non-reg account to raise the funds. Assume a mix of stocks in the red and in the black so there would be little net tax consequence. Plan to replenish the account over 5 or 6 years.
2. borrow the funds and plan to pay off the loan over the same 5 or 6 years.
3. sell stocks as in #1, but then also borrow the same amount to replenish the sold stocks over a shorter period of time, say 6 to 12 months through calendar 2023, legging in to dollar cost average. Pay off the borrowed funds over 5 or 6 years. Interest expense on the borrowed funds in this case would be tax deductible.
Part of the decision relates to expected interest rates over the timeframe and the shape of the (expected) recovery. If we assume 4 to 6% average interest rate over the life of the loan but a more significant bounce in equity markets, then option 3 makes sense. But I am not sure I've considered everything, including risk.
If you think option 3 makes sense, could you suggest 5 - 10 lower-risk stocks (dividend growth / growth) with the noted timeframe in mind. Many thanks and take as many credits as needed.
1. sell stocks in a non-reg account to raise the funds. Assume a mix of stocks in the red and in the black so there would be little net tax consequence. Plan to replenish the account over 5 or 6 years.
2. borrow the funds and plan to pay off the loan over the same 5 or 6 years.
3. sell stocks as in #1, but then also borrow the same amount to replenish the sold stocks over a shorter period of time, say 6 to 12 months through calendar 2023, legging in to dollar cost average. Pay off the borrowed funds over 5 or 6 years. Interest expense on the borrowed funds in this case would be tax deductible.
Part of the decision relates to expected interest rates over the timeframe and the shape of the (expected) recovery. If we assume 4 to 6% average interest rate over the life of the loan but a more significant bounce in equity markets, then option 3 makes sense. But I am not sure I've considered everything, including risk.
If you think option 3 makes sense, could you suggest 5 - 10 lower-risk stocks (dividend growth / growth) with the noted timeframe in mind. Many thanks and take as many credits as needed.
