LIC & LIT Leveraging to buy shares

Yes, far more likely situation. Perhaps he forgot to add Mil?

 

You cruel, cruel pack of so and so's.

Merely because I typed a '5' instead of inserting '%' for the last part humiliation ensues.

$255 is about what I charged to look at a briefing paper.

And the more observant observer will notice I had good grace not to bring to attention the difference between 255 and 225.

Oh my....

 

You mean this sort of thing shown below? If so counselling might be recommended:

 

For that I charge way, way more believe you me.

It's a niche market with a 30cm scar on display so the additional charge is justified.

 

For some reason I'm imaging @SatayKing to be the man on the bottom left...

 

LOL, yes but when much younger. All hair is still there except for on his head.

 

Hmm, I am so tempted to post the selfie I took in hospital and take another to match this for the Before and After comparison:

Young children - and probably many others - would run screaming into the night.

 

There is the option of GEAR EFT

 

I have used a little bit of gearing, but I have time on my side and I am not sure I would recommend it for other people.

I have used the NAB equity builder to borrow to an LVR of 20%. Used the cash to buy a LIC at a steep discount to NTA with a lot of cash in the bank. I had a thesis and it has payed off in the short term. I am not sure I could leverage into the market at this point or to a LIC that was trading at or above NTA. I've also got it set to interest only.

If I had a more stable career I might be more comfortable with a higher LVR but this is very comfortable for me right now.

 

It's probably the right idea for young investors: Two Yale Economists Urge Leverage for Young Investors - TIME

I aim to leverage either at 50% or 30% LVR with NAB Equity Builder. But I need to do more calculations.

 

My opinion, leverage is a great wealth creator if you are buying businesses for the ultra long term. You have to be extremely controlled of your finances and your mental/emotional abilities in relation to investing.
Best way to access leverage is with a product that does not force the sale of assets at the worst time(margin calls) and with access to the cheapest cost of credit possible.
In terms of amount, well I personally feel comfortable with a 30% LVR others may be comfortable with higher levels.

 

Have you thought about a managed fund with internal gearing. My favourite is the CFS geared Australian share fund.

You get the same geared exposure (and volitility!) without the risk of margin calls.
Plus a dividend that would impress any income investor.

Willy

 

2.23% management fee... why not go with Betashares' GEAR/GGUS instead?

 

Will check it out.

Cheers

Willy

 

It's a matter of scale. No real harm in leveraging into shares if you start small.
A lot of people are fearful of borrowing to buy shares, yet are happy to borrow $1M at 95% LVR for property.

 

Why is the dividend/distribution so high with GEAR? Is it very lumpy and main,y the result of capital gains or has it something to do with their gearing strategy and low interest rates?

 

I only ever bought shares with cash, never used debt.

That is my approach and so far never come unstuck .

 

Yes, it is a no brainer and essential to ensure you can safe guard and grow your capital. Investing cash directly into the stock market is risky, makes you vulnerable to losing it, and income generation forever and giving slight chance of a Cash on Cash return of 0% . If you secure your capital with property and borrow say 50k for shares, even if they turn out to be dogs and drop to 20k. (dividends may be the same or more) I Your property will keep compounding your capital. It still give you income and in 5 or 10 years, the loss on shares will amount to a fraction of your profits from either CG or rent. A reduction on your CoC returns will hardly be noticeable. To access gains in the share market, property is a tax effective way to do it, and secure those gains forever and to continue to grow them, while enabling you to invest and get more income and growth from great businesses.

 

You can use put options and nonrecourse loans