Borrowing against your home’s equity for investment was the smartest personal finance decision until recently. Stocks were soaring, as was the real estate market. Plus, you could borrow at rates that seemed insignificant compared to projected rates of return.

The mindset that home equity must be leveraged to generate economic gain persists, even as rising rates increase the cost of a home equity line of credit. A reader recently inquired about the $700,000 he has at home. “Should I use this capital for investing or for other purposes, such as buying another property? ” he asks.

Answer: No, not now.

The Bank of Canada raised its key rate by one percentage point on Wednesday, a decision that will be fully passed on to variable rate debt such as lines of credit. The total increase in the key rate this year by the central bank amounts to 2.25 points, and more rate hikes are to come.

The cost of borrowing with a HELOC after the last Bank of Canada move will typically be 5.2%, plus or minus a bit. For investing with a HELOC to be effective, you must earn an after-tax return that exceeds your cost of borrowing.

Stocks are having a bad year, so you are buying at better prices than six months ago. But there is so much economic uncertainty to face today. A 10% or 20% drop in the stock is just as possible as similar gains. You are dealing with similar negative feelings in real estate. High rates have already pulled home prices down from February’s peak and further declines look likely as rates soar.

There’s nothing wrong with not touching the equity in your home. This is how we drove in Canada, before HELOCs became a tool of wealth creation for many. Full credit to anyone who dived into a HELOC and generated big returns in stocks or real estate. You have tapped into a moment in time.

We now live in a different era, where asset prices fall and interest rates rise. If we come to a low price point for stocks and real estate along with falling rates, borrowing to invest with a HELOC might make sense again.

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Rob’s Personal Finance Reading List

How auto loans can get in the way of buying a home

All about how your debt and borrowing habits affect you when apply for a mortgage. Beware of car loans.

Dentistry is not a place to save

This article on the broad health risks associated with gum disease highlights the value of regularly visiting a dentist’s office for cleanings and checkups. Here is the last federal plan to fund dental care for low- and middle-income children.

The golden age of savings is over

The New York Times explains how the popularity of fast fashion has negatively affected thrift stores, where you could traditionally find quality clothes at low prices.

The FOMO Killers

The fear of missing something is a huge factor of insecurity that leads us to increase our expenses. Here is 12 tips to help you stop comparing yourself to others.

Today’s financial tool

Advice for newcomers to Canada on improve your credit score.

The cashless zone

Given the boom in travel, I thought you might appreciate a flight attendant’s list of the worst species passengers on flights.

look at this

Financial planner Zainab Williams offers some tips to reduce costs for people trying to cope with the rising cost of living.

Tweet of the week

Some perspectives on plunging consumer confidence.

ICYMI

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