Note: This is a guest post by Ross Taylor. His bio is at the end of the post.

Financial planners and mortgage professionals like to trumpet the''Smith Manoeuvre, as coined by Fraser Smith in 2002. In a nutshell, this ‘program’ shows you how to free up equity in your home for investment purposes, and to do so in a tax efficient manner.

I hate to burst the bubble ' as a matter of fact I am big fan of anyone who has the patience to write a book, but the notion of tax deductible investment loans has been around for decades.

I give full credit to Fraser Smith for popularizing an old concept, and even getting an entire industry and nation to name it after him.

When I started out as a fresh faced stock broker in the mid-eighties, this concept was already''de rigeur. The guys at Investors Group, Financial Concept Group, Regal Capital Planners and the Principal Group were into leveraged investing in a big way. Fraser Smith himself was peddling the strategy as a financial planner in Vancouver at that time.

One person who embraced borrowing to invest was''The Honourable Michael Lee-Chin, who was making his mark in the Hamilton office of Investors Group in the late seventies, before becoming regional manager of Regal Capital Planners in 1979.

Michael went on to huge success, becoming a self-made billionaire through a series of canny, gutsy business decisions in the eighties and nineties.

I recall irking one particular University of Waterloo professor client, who I had been courting for several months. One day he dumped me and said he was refinancing his home and pouring all the proceeds into mutual funds with Michael.

He said the capital gains potential and tax benefits were simply too good to pass up. I urged caution, suggesting this was a risky venture that could jeopardize his family's future; after all, there was no guarantee the stock market would continue to go up and up. He wanted no part of my conservatism, and parted my company with a harrumph.

He had the last laugh as the stock market continued on a raging bull tear for years, and the strategy looked brilliant, and my fears for him groundless (this time).

Today the notion of leveraging your assets to invest is alive and well. True, there were hundreds of long faces in 2008 and 2009 when the markets for stocks and real estate took a bit of a beating, but that was in the past, and Fraser Smith's ‘legacy’ continues to shine on.

Whatever you want to call it, please understand that borrowing against the equity in your home is a risky move – I said it twenty five years ago, and I still do – probably I will be right one day. What are some of the risks?

• The investments you make with the borrowed money could go down in value
• The cost of borrowing could increase if interest rates rise
• If real estate prices correct, you could end up penned into something uncomfortable – you really need to know your long term living arrangements
• Please be very prudent about investing in anything that has a sales commission attached either at the front end or the back end of your purchase
• Tax rules can change at any time in the future

If you would like to read others' opinions on the''Smith Manoeuvre, here are a few links:

Ellen Roseman

Canadian Capitalist Blog