THE SMITH MANOEUVRE History of THE SMITH MANOEUVRE
THE SMITH MANOEUVRE What is THE SMITH MANOEUVRE
THE SMITH MANOEUVRE is a financial strategy designed to convert the non-deductible interest debt of a house mortgage to the deductible- interest debt of an investment loan, which simultaneously ensures the building of a free and clear investment portfolio.
tidbit How much do you have to earn to pay off a $200,000 loan?
Read it and weep… You need to earn this much: $700,402 You pay this much income tax: $280,161 You have this much left: $420,241 You pay this much bank interest: $220,241 Pay back the original loan: $200,000
During the past 20 years, THE SMITH MANOEUVRE has not been challenged by any tax authority, by any lawyer, by any accountant, by any financial planner or by any financial guru as regards the theory, the strategy, the mechanics, the arithmetic or the projected outcomes.
The Four Steps Plain Jane Smith Manoeuvre 1. Re-borrow and invest any paydowns on your first mortgage. 2.Apply tax refunds against your first mortgage then immediately re-borrow and invest the same amount.
The Four Steps Enhanced Plain Jane 3.Cash in and apply current paid up assets against the first mortgage in the morning, re-borrow and invest the same amount in the afternoon. 4.Divert any monthly savings or investment programs against the first mortgage, and immediately re-borrow and invest the same amount.
case history: Quantify the value of THE SMITH MANOEUVRE for the Blacks.
The Blacks $200,000 at 7% for 25 years Both work, $100,000 per year 40% tax bracket $50,000 rainy day fund Adding $500 per month 40 years of age, 2 kids and a dog
Future value for the Black’s current investment program?
FV of $50,000 for 25 yrs $541,735 FV of $500/mth for 25 yrs 663,417 _______ Total Future Value $1,205,152