Best long term option to invest 20k for child?

[bunsen burner]

Post 52

So are you retracting post 52 that your specific example is typical of the property market.

Are you being a tool on purpose? My point is quite clear. It's a typical example of how leveraging works. What ever the growth rate I used in that example is irrelevant. I've told you this many times now. Change the growth rate to 10% rather than 100% - you'll still see one investment class outdoing the other.

So am I to understand that the initial investment was a further $4680 light on for cash flow - meaning a negative of more like $10K, but because the particular market improved significantly there was cash flow improvement through the subsequent years.

What is your problem? It cost $20k over 5 years to hold. Not $18k, not $22k. 20k. Twenty f***ing Kay. Get it? It's not f***ing hard.

I assume you are leading to "Yes, but what if the market was flat and rent didn't go up, it would cost more to hold". Yes it would but that's totally irrelevant.

Do you understand the term "pound for pound" or "peri parsu" or "all other things being equal"?

You seem to have this notion that I am using a really good example and that is skewing the point in my favour. Not true at all. Go use the exact example with shares with 100% growth in 5 years plus increasing dividends because of the bull market.

You need to get over this chip on your shoulder thing and try to grasp what my point is because you are failing miserably. I'll give you a clue:

Pick a growth rate and an interest rate and a starting capital. Use that as a template. Then max out the LVR of property in one example and then use the same template but max out the LVR amount with shares.

You'll come to the same conclusion everytime given everything else is equal except the LVR. It's a pretty simple concept so it's about time you snapped the **** out of it and got with the program.

 

[bunsen burner]

Check any of the margin lenders.

http://anz.com/Documents/AU/Wealth/marginlending/mlaslrptstk.pdf

If the link works for you it lists the LVR for every stock. As an example the standard LVR for Commonwealth Bank (CBA) is 75%.

There's limited stocks at over 50%. At the end of the day the LVRs with stocks are nowhere near the LVRs you can get with property. And if you're doing a simple buy and hold strategy, real estate will get you better returns nearly every time because you can have higher LVRs. End of story. Not sure how you can build a case to the contrary. The figures don't lie.

 

[DeanoT]

Err, I was talking exclusively about buy and hold and you came in and challenged my discussion. Maybe you should have understood what I was talking about before doing your hero act?

I have never claimed there are no other investment vehicles that may get better returns. I have only claimed that when it comes to buy and hold that property is better.

That would make you wrong and me right

I am well aware you are talking about buy and hold, as if that wasn't obvious. Clearly you can't read. Read my quote below, and tell me how it is not applicable to buy and hold. Short, medium or long term pretty much covers all investment strategies right ?

There are plenty of investment vehicles available to trade stocks short, medium or long term with leverage. Buy and hold is irrelevant.

Options, CFDs etc are not buy and hold strategies. Therefore you are wrong.

If you go to a lender and offer shares as security, the most you will get is 50% LVR for a starter investor and be limited to safe blue chip stocks.

As soon as you go into what your doing (and we've not talking about going through a managed fund here) it's not a buy and hold strategy. It's more sophisticated trading strategies that most people can't do as a novice investor. I am only talking about buy and hold strategies. Not sure why you're trying to be a hero and shift the goalposts?

OMG, what planet are you on ?

http://www.commsec.info/faqs/margin-lending.aspx

http://www.nab.com.au/wps/wcm/connect/nab/nab/home/personal_finance/14/15/4

http://anz.com/Documents/AU/Wealth/m...laslrptstk.pdf

http://www.westpac.com.au/personal-banking/investments/borrow-to-invest/standard-bt-margin-loan/

Click the links above, and you will see that ALL 4 of the above banks will provide you with an LVR of up to 70-75%. Not far from the 80% borrowing example you used in your property calcs. Also, if you can show the bank sufficient liquid net worth to meet margin calls, you can often ask for an LVR of up to 80%, thereby replicating your property example without resorting to "sophisticated" trading vehicles. Try a little research next time before spewing such lies.

So, can we finally put to bed this absurd idea that it is easier to leverage property than a buy and hold share portfolio ? Can we BB ?

Also, your proclaimed investment expertise is appalling. Options, CFDs, Futures, etc may well be used mostly by short-term investors, but if you think buy and hold investors can not use these products to replicate a buy and hold strategy, then you don't have much imagination. Just because you don't know how to use them properly doesn't mean others can't.

The only thing that needs to be corrected is your understanding of what I am talking about. I made a comment about buy and hold and you raced in and tried to discuss all investment strategies and now have taken the line that I have talked about all investment strategies.

Maybe if you wanted to discuss that should have left your hero cape at home. If you want to discuss buy and hold, by all means, but stop wasting your time with your straw argument.

If fund managers are so good how come they've lost a large percentage of the population's super funds a s**t load of money in recent years?

Sure, the market has been down and losses are excpected, but many didn't have the ability to minimalise losses. I have many friends with managed funds and many lost absolute shitloads (ie more than the index lost)over the last few years because their fund managers couldn't handle the downturn.

The purpose of me entering this debate was to correct the numerous mistruths spewing from your mouth. You seem to think that you are a financial expert, when it is clear that your knowledge is limited to running a few grade 3 type calculations.

Your above quote is garbage. Professional money managers have done very well over the 5-10 year time frame. The point is that unsophisticated investors will likely get better risk-adjused returns by giving their money to the professionals, rather than trying to do it themselves. Investors who know what they are doing, and are willing to take on more risk than an institutional fund manager may do better by doing it themselves.

As for their supposed poor performance over the past 2-3 years, I assume that you realise that many fund managers are required to be 100% fully invested in the markets, even if they see no buying opportunities. I know of several professional money managers who wished they could liquidate their holdings during the GFC, but were unable to due to fund rules.

 

[bunsen burner]

Click the links above, and you will see that ALL 4 of the above banks will provide you with an LVR of up to 70-75%.

On limited stocks.

Not far from the 80% borrowing example you used in your property calcs.

I used 100%. If you have equity you can get 100% quite easy.

Also, if you can show the bank sufficient liquid net worth to meet margin calls, you can often ask for an LVR of up to 80%, thereby replicating your property example without resorting to "sophisticated" trading vehicles. Try a little research next time before spewing such lies.

I've done my research. Property has better LVRs that stocks.

So, can we finally put to bed this absurd idea that it is easier to leverage property than a buy and hold share portfolio ? Can we BB ?

Nope. Go show me where you can get 100%. You can get 75-ish if you only choose the stocks that lender allow 75%.

Also, your proclaimed investment expertise is appalling. Options, CFDs, Futures, etc may well be used mostly by short-term investors, but if you think buy and hold investors can not use these products to replicate a buy and hold strategy, then you don't have much imagination. Just because you don't know how to use them properly doesn't mean others can't.

I used to design software for options trading system so I'm quite aware of how they work, but thanks for your concern. They are advanced trading strategies of which I'm not talking about. You came into my discussion remember? You essentially want to change the goal posts and straw man me into saying that advanced trading strategies don't work. Not going to happen.

If I wanted to talk about stocks vs property in regards to advanced trading strategies then I wouldn't just be talking about buy and hold property strategies. There's development, renos, and options with property too. But they are out of the scope of my point. Not sure why that is so hard for you to accept?

The purpose of me entering this debate was to correct the numerous mistruths spewing from your mouth. You seem to think that you are a financial expert, when it is clear that your knowledge is limited to running a few grade 3 type calculations.

There are no mistruths. Maybe you can leverage higher than I said with stocks but you have to compromise with buying only those stocks that are 75%. That means a lack of diversification. If you have a good balanced portfolio you may get 50-60%. F*** all compared to what you can get on property.

Your above quote is garbage. Professional money managers have done very well over the 5-10 year time frame. The point is that unsophisticated investors will likely get better risk-adjused returns by giving their money to the professionals, rather than trying to do it themselves. Investors who know what they are doing, and are willing to take on more risk than an institutional fund manager may do better by doing it themselves.

I don't know one property investor who has lost money over the last 10 years, but I know plenty who have lost through FAs. And that's not saying that holds true across the board, but you'd be hard to convince anyone that shares is a safer option.

As for their supposed poor performance over the past 2-3 years, I assume that you realise that many fund managers are required to be 100% fully invested in the markets, even if they see no buying opportunities. I know of several professional money managers who wished they could liquidate their holdings during the GFC, but were unable to due to fund rules.

Then that is another disadvantage of putting your money with FAs.

 

[bunsen burner]

when it is clear that your knowledge is limited to running a few grade 3 type calculations.

I'm not going to do a full calculation on a forum. It's just a quick way of showing how it was all worked out. When doing quick calculations I use things like rule of 70 or 0.7 to calculate your annual net rental return. What did you expect? An itemised list with exact figures? barooooogah! And where did you think I got that example from? Made it up? Read it from a book? Got told from the guy down the pub?

 

[Bulldog Joe]

Are you being a tool on purpose? My point is quite clear. It's a typical example of how leveraging works. What ever the growth rate I used in that example is irrelevant. I've told you this many times now. Change the growth rate to 10% rather than 100% - you'll still see one investment class outdoing the other.

What is your problem? It cost $20k over 5 years to hold. Not $18k, not $22k. 20k. Twenty f***ing Kay. Get it? It's not f***ing hard.

I assume you are leading to "Yes, but what if the market was flat and rent didn't go up, it would cost more to hold". Yes it would but that's totally irrelevant.

Do you understand the term "pound for pound" or "peri parsu" or "all other things being equal"?

You seem to have this notion that I am using a really good example and that is skewing the point in my favour. Not true at all. Go use the exact example with shares with 100% growth in 5 years plus increasing dividends because of the bull market.

You need to get over this chip on your shoulder thing and try to grasp what my point is because you are failing miserably. I'll give you a clue:

Pick a growth rate and an interest rate and a starting capital. Use that as a template. Then max out the LVR of property in one example and then use the same template but max out the LVR amount with shares.

You'll come to the same conclusion everytime given everything else is equal except the LVR. It's a pretty simple concept so it's about time you snapped the **** out of it and got with the program.

I am terribly terribly sorry.

When I used the term "specific" I was referring to the investment performance. You suggested that it was typical and I assumed you meant typical of the Property investment performance because you never indicated otherwise.

Now you clarify by saying it is typical of leveraging only.

Yes, I do agree that property is easier to leverage at 80% or more, and if you leveraged to the maximum at outset and obtained the same rates of return in respect to income, expenses and tax you would receive a better return from property, provided the return exceeded the interest rate.


However, the likelihood of that is at best remote and shares give vastly different results on income (franking credits) expenses (no maintenance, insurance or destructive tenats) and CGT with the possibility of staged disposal not available with property. This also needs to ignore the progressive leveraging that is more readily available with shares.

Just another point on your leverage example. The banks require you to prove your income to lend the 80% or more and will not usually count all of the proposed rental income. On the other hand leveraging for shares through margin loans requires only the initial outlay and contains no income requirement to obtain the loan. In that case the shares are actually easier to leverage.

I again apologise that I am not with your program.
I consider my view a little more balanced than you have indicated yours to be.

 

[DeanoT]

I’ll give you a similar example to your property calculation, this time for shares.

Let’s say you have $25K to invest. You can get 75% LVR on most of the top ASX 50 blue chips. You pick out ten that you like. Let’s say ANZ, BHP, CBA, QAN, QBE, RIO, TAH, WBC, WES and WOW. All available to borrow at 75% LVR. Bank approves your margin loan and you purchase $100K worth of shares.

Let’s say that your portfolio doubles in value (to replicate your property example) over a certain time period (it could be 2 years or 20 years, it doesn’t matter). You now have a $200K share portfolio, with $125K equity (ignore borrowing costs for the moment, which you may have funded through dividends), and assume the original margin loan value of $75K is unchanged. All from your $25K deposit.

You are now only 37.5% geared ($75K margin loan on a $200K portfolio). You may be happy with this, or you may want to retain your original 75% gearing level. To do this, you increase your margin loan from the current $75K to $375K, and you now have a $500K share portfolio, with $125K equity.

You now have a $500K share portfolio from an initial outlay of $25K, representing an effective leverage on your initial investment of 20 to 1.

Do you see how this is exactly the same as putting a deposit down on your own home, then using the accumulated equity to invest in your first investment property, then your second, third, etc. It is no different, it’s just pyramiding your initial outlay over and over again, and the transaction costs pale into comparison to that of property investing.

All this using nothing but margin lending. No sophisticated or exotic derivatives. No additional injection of capital or deposits to increase the value of your portfolio, just pure leveraging off your initial investment and capital growth.

Using the simple “well I can borrow 100% of a property value which you can’t do in shares” is incredibly short-sighted.

 

[bunsen burner]

I am terribly terribly sorry.

When I used the term "specific" I was referring to the investment performance. You suggested that it was typical and I assumed you meant typical of the Property investment performance because you never indicated otherwise.

Now you clarify by saying it is typical of leveraging only.

I clarified well before "now". Numerous times as well. So yes, you should be sorry.

Yes, I do agree that property is easier to leverage at 80% or more, and if you leveraged to the maximum at outset and obtained the same rates of return in respect to income, expenses and tax you would receive a better return from property, provided the return exceeded the interest rate.

My one and only point. Thankyou for admitting I was right. Not sure why you ever questioned me in the first place. perhaps you jumped the gun and assumed I was saying something because you have a bit of a chip on your shoulder about property. Don't worry, you're not the only one.

I again apologise that I am not with your program.
I consider my view a little more balanced than you have indicated yours to be.

I'm right, you're wrong, how is your view more balanced? Oh I get it, you've assumed that I have no understanding of bigger pictures? You've already made one wrong assumption, do we have to go through all this again?

 

[bunsen burner]

I’ll give you a similar example to your property calculation, this time for shares.

Let’s say you have $25K to invest. You can get 75% LVR on most of the top ASX 50 blue chips. You pick out ten that you like. Let’s say ANZ, BHP, CBA, QAN, QBE, RIO, TAH, WBC, WES and WOW. All available to borrow at 75% LVR. Bank approves your margin loan and you purchase $100K worth of shares.

Let’s say that your portfolio doubles in value (to replicate your property example) over a certain time period (it could be 2 years or 20 years, it doesn’t matter). You now have a $200K share portfolio, with $125K equity (ignore borrowing costs for the moment, which you may have funded through dividends), and assume the original margin loan value of $75K is unchanged. All from your $25K deposit.

Let's stop right there. You've just compared apples to apples.

Property is waaay in front.

Ahead you start turning your apple into an orange to try make a way where shares out perform property. But you can do this with property as well. You just access the equity from your property and purchase again.

You are now only 37.5% geared ($75K margin loan on a $200K portfolio). You may be happy with this, or you may want to retain your original 75% gearing level. To do this, you increase your margin loan from the current $75K to $375K, and you now have a $500K share portfolio, with $125K equity.

You now have a $500K share portfolio from an initial outlay of $25K, representing an effective leverage on your initial investment of 20 to 1.

Do you see how this is exactly the same as putting a deposit down on your own home, then using the accumulated equity to invest in your first investment property, then your second, third, etc. It is no different, it’s just pyramiding your initial outlay over and over again, and the transaction costs pale into comparison to that of property investing.

All this using nothing but margin lending. No sophisticated or exotic derivatives. No additional injection of capital or deposits to increase the value of your portfolio, just pure leveraging off your initial investment and capital growth.

Using the simple “well I can borrow 100% of a property value which you can’t do in shares” is incredibly short-sighted.

I dare you to do the sums when you pyramid over and over again - the gap between property and shares just gets bigger and bigger. I've done the sums before as part of diligence. I'm not convinced you have sat down and worked it out. It's a bit rich claiming you're correcting my wrongs when clearly you're the one who is wrong here.

Not sure why you mentioned transaction costs? Yes they are cheaper with stocks but in the big picture it means little. Why does an extra 10k transaction cost mater when you're made an extra $100k? You're spewing propaganda.

 

[DeanoT]

Let's stop right there. You've just compared apples to apples.

Property is waaay in front.

Way in front on what ? The LVR ? That's what I just said. Why repeat it ?

Ahead you start turning your apple into an orange to try make a way where shares out perform property. But you can do this with property as well.

I did ? I have merely repeated your earlier example of an investment doing well. When others challenged you (not me) for presenting a very favourable investment scenario, you said that the performance was not the point, it is the example. And show me where I made a comparison to performance of shares v property in my calculation. You won't be able to because I didn't do it.

You just access the equity from your property and purchase again.

Which is exactly what you do in the above margin lending scenario. No different. No additional injection of funds, no more deposits. Just leveraging and pyramiding.

I dare you to do the sums when you pyramid over and over again - the gap between property and shares just gets bigger and bigger.

What sums ? What gap ? Shall I repeat myself, no additional injection of funds, no further deposits. Just use your existing equity to increase your portfolio size through increased margin lending. Forget the 75% margin limit, no additional injection of funds beyond your initial depost = 100% LVR. Do you not get that ?

I've done the sums before as part of diligence. I'm not convinced you have sat down and worked it out. It's a bit rich claiming you're correcting my wrongs when clearly you're the one who is wrong here.

You've done the due diligence ? Good on you. I do this for a living. You are obviously a keen, but part-time investor with limited ability to see the big picture.

Not sure why you mentioned transaction costs? Yes they are cheaper with stocks but in the big picture it means little. Why does an extra 10k transaction cost mater when you're made an extra $100k? You're spewing propaganda.

Because one of the key reasons for the difference between performance in shares and property is transaction costs. Stamp duty is never 10K on property. On a $400K property you are looking at $15K+ minimum here in Vic. $15K on a $400K property equals down almost 4% before you start, and adds up substantially if you repeat this process over and over again.

The only propaganda around here is spewing from your mouth.

Your admitted lack of knowledge of the existence of geared investment funds earlier in this thread is a very good indicator of your lack of investment expertise in the sharemarket.

 

[bunsen burner]

Way in front on what ? The LVR ? That's what I just said. Why repeat it ?

because up until now you've had real trouble admitting I'm right. But at least now you have the balls to admit it.

What sums ? What gap ? Shall I repeat myself, no additional injection of funds, no further deposits. Just use your existing equity to increase your portfolio size through increased margin lending. Forget the 75% margin limit, no additional injection of funds beyond your initial depost = 100% LVR. Do you not get that ?

Sit down, put the sums in and see what returns come out the other end.

You've done the due diligence ? Good on you. I do this for a living.

That doesn't mean you understand property investment. Typical FAs for some reason all think because they understand stocks then they understand direct property. Not usually the case.

You are obviously a keen, but part-time investor with limited ability to see the big picture.

Nope. I can see the big picture fine. It's just that I made a point about a small picture and you're not coping well that I won't be budged into taking the big picture argument.

Your admitted lack of knowledge of the existence of geared investment funds earlier in this thread is a very good indicator of your lack of investment expertise in the sharemarket.

I have NEVER claimed to be an expert on stocks. I have however done the calculations for buy and hold strategy on stocks and property and all things being equal property comes out on top every time.

I have never said property as a whole is better than shares or that buying and hold property is better than CFDs or Options etc. I simply said that if you're doing buy and hold then property wins out every time because the higher leveraging. And you admit that.

You just seem upset that I have taken up your straw argument.

 

[DeanoT]

because up until now you've had real trouble admitting I'm right. But at least now you have the balls to admit it.

LOL. I draw an example of margin lending having a 75% INITIAL limit, and now you think you have proven your point.

Sit down, put the sums in and see what returns come out the other end.

Done the sums many times. Shares win in the end. Leveraged or unleveraged.

That doesn't mean you understand property investment. Typical FAs for some reason all think because they understand stocks then they understand direct property. Not usually the case.

I have four investment properties, plus I own my own home outright. As said earlier in the thread, I think property is a terrific defensive investment. But if you want leveraged returns, it is inferior to stocks. "Sit down, put the sums in and see what returns come out the other end".

Nope. I can see the big picture fine. It's just that I made a point about a small picture and you're not coping well that I won't be budged into taking the big picture argument.

You're clearly incapable of thinking beyond your own conveniently drafted simple examples.

I have NEVER claimed to be an expert on stocks. I have however done the calculations for buy and hold strategy on stocks and property and all things being equal property comes out on top every time.

You admit you are not an expert on stocks, yet claim to have objectively evaluated all the pros and cons of the property v stocks argument. Fail.

I have never said property as a whole is better than shares

You just said it in your quote above.

or that buying and hold property is better than CFDs or Options etc.

As stated several times, various investment vehicles, including CFDs, Options and Futures can be used to synthetically replicate a buy and hold strategy. But you don't want to hear that.

I simply said that if you're doing buy and hold then property wins out every time because the higher leveraging.

Keep telling yourself that it does. It doesn't make it true.

And you admit that.

I did. Show me where ?

You just seem upset that I have taken up your straw argument.

You accuse me of a strawman argument, after falsely accusing me of agreeing with your statement that "if you're doing buy and hold then property wins out every time because the higher leveraging". The mind boggles.


You are clearly incapable of looking at anything from a rational point of view.

Good luck in your investing.

 

[SirJimi05]

Sorry if this is a dumb question but im just wondering where the repayments come from if you borrow for shares?

If i were to invest 25k and borrow 75k as per the example i would have to make repayments right? With property you can use rent to help offset the repayments. With shares do i have to make all the repayments out of my own pocket and do the share values increase enough to make it worthwhile?

Sorry again if it's a stupid question. I've never invested in shares before.

 

[bunsen burner]

Done the sums many times. Shares win in the end. Leveraged or unleveraged.



I have four investment properties, plus I own my own home outright. As said earlier in the thread, I think property is a terrific defensive investment. But if you want leveraged returns, it is inferior to stocks. "Sit down, put the sums in and see what returns come out the other end".



You're clearly incapable of thinking beyond your own conveniently drafted simple examples.



You admit you are not an expert on stocks, yet claim to have objectively evaluated all the pros and cons of the property v stocks argument. Fail.



You just said it in your quote above.



As stated several times, various investment vehicles, including CFDs, Options and Futures can be used to synthetically replicate a buy and hold strategy. But you don't want to hear that.



Keep telling yourself that it does. It doesn't make it true.



I did. Show me where ?



You accuse me of a strawman argument, after falsely accusing me of agreeing with your statement that "if you're doing buy and hold then property wins out every time because the higher leveraging". The mind boggles.


You are clearly incapable of looking at anything from a rational point of view.

Good luck in your investing.

I noticed you have gone back to your straw argument again and trying to argue I have said property is better than stocks across the board.

 

[Bulldog Joe]

I clarified well before "now". Numerous times as well. So yes, you should be sorry.

My one and only point. Thankyou for admitting I was right. Not sure why you ever questioned me in the first place. perhaps you jumped the gun and assumed I was saying something because you have a bit of a chip on your shoulder about property. Don't worry, you're not the only one.

I'm right, you're wrong, how is your view more balanced? Oh I get it, you've assumed that I have no understanding of bigger pictures? You've already made one wrong assumption, do we have to go through all this again?

Thank you BB for your insistence on the last word.

It is just that your view lacks balance because it depends on an assumption that shares will never provide a better return than property. That does include tax benefits/penalties on ultimate disposal. For your information share dividends can provide higher income than property rentals with the additional benefit of franking credits.

I have conceded that property can provide good returns.

Perhaps you could concede that all things between property and shares are not equal and assumptions used on Property Investment are not necessarily relevant to Share Investment.

A balanced view can consider more than one element of a given scenario.

As far as the right and wrong, perhaps we can agree to disagree, but nothing I have posted is actually incorrect.

 

[bunsen burner]

Thank you BB for your insistence on the last word.

What did you expect?

Did I misquote what you said and challenge it?
Did I misinterpret anything you said?

I'm all for a debate but there's nothing more frustrating than when someone tries to shoot you down because they've completely misinterpreted what you've said and no matter how hard you point it out to them they just don't get it. At least you had the common sense to stop, listen, and accept I was saying something different than you initially thought.

No harm done.

 

[A Living God]

Sorry if this is a dumb question but im just wondering where the repayments come from if you borrow for shares?

If i were to invest 25k and borrow 75k as per the example i would have to make repayments right? With property you can use rent to help offset the repayments. With shares do i have to make all the repayments out of my own pocket and do the share values increase enough to make it worthwhile?

Sorry again if it's a stupid question. I've never invested in shares before.

As the long as the amount borrowed is less than leverage allowed by the bank on your particular shares you don't need to make any repayments.

Using the example of investing 25k and borrowing 75k @ 9% p.a.

In a month your share increase in value by 2%, shares now worth 102,000. Because the value of the shares have increased the bank is now willing to loan you $76,500.

The interest on the loan for the month was $1,125, added to the orginal 75,000 you now owe $76,125. Meaning your still within the limit and no repayment is required.

If the share price was to fall so that the amount you owe is greater than 75% of the value of the shares you would then get a Margin Call requiring you to either deposit money into your trading account or sell some of shares to get back within the acceptable threshold.

 

[Bulldog Joe]

Sorry if this is a dumb question but im just wondering where the repayments come from if you borrow for shares?

If i were to invest 25k and borrow 75k as per the example i would have to make repayments right? With property you can use rent to help offset the repayments. With shares do i have to make all the repayments out of my own pocket and do the share values increase enough to make it worthwhile?

Sorry again if it's a stupid question. I've never invested in shares before.

Sorry SirJim.
In the argy bargy I missed your post, which is certainly deserving of a valid answer.

You can receive dividends on the shares to offset the interest payment and how much it offsets will depend on the shares purchased.

You can also capitalise the interest (that is not pay at all) but you do need to watch the share values to avoid margin calls if you use that type of loan.

I would think with the lack of expertise, that you have admitted to, you would need to be cautious.

 

[SirJimi05]

Sorry SirJim.
In the argy bargy I missed your post, which is certainly deserving of a valid answer.

You can receive dividends on the shares to offset the interest payment and how much it offsets will depend on the shares purchased.

You can also capitalise the interest (that is not pay at all) but you do need to watch the share values to avoid margin calls if you use that type of loan.

I would think with the lack of expertise, that you have admitted to, you would need to be cautious.

Thanks for the clarification. Thanks to the poster above you also.

Yes i certainly think the cautious approach is the way to go. The question was more just out of interest really.

Maybe it is something i can try down the track.

 

[WCEforeverman]

See an authorised financial planner. Shop around. Most planners have a 'first appoinment free' service so you can see a few. Make sure you ask questions and ask for alternatives.

^This should be the only advice provided to you in this thread.

I don't want to put a dampner on this thread, but it is very close to providing advice with out a licence.

 

[DeanoT]

See an authorised financial planner. Shop around. Most planners have a 'first appoinment free' service so you can see a few. Make sure you ask questions and ask for alternatives.

^This should be the only advice provided to you in this thread.

I don't want to put a dampner on this thread, but it is very close to providing advice with out a licence.

The only real advice offered to the OP was to speak to an expert/independent adviser.

The rest is just back and forward debate about the respective merits of different investment types.

Since no particular financial product was offered or promoted, there is no risk of a breach in this thread.

 

[bunsen burner]

^This should be the only advice provided to you in this thread.

He could actually learn to invest in stocks himself. He doesn't necessarily need an FA.

 

[WCEforeverman]

That's why there are no Financial Advisers in Australia....oh wait....

 

[bunsen burner]

That's why there are no Financial Advisers in Australia....oh wait....

I don't think it's appropriate for you to suggest anyone is stupid stupid.

 

[SirJimi05]

How come my post was deleted