NAB Equity Builder - too good to be true?

LVR is around 60% at the moment but yes not low enough to suspend principle repayments. Not a feature I’m particularly interested in but it may appeal to some.

 

I haven't looked into it much but the idea would be to increase debt recycling, tax deductions and asset accumulation. In the sense, instead of paying the down the principle, buy more shares with the money. Would have to manage risks though, conservatively I'd do this for only the first few years and then start paying back. Also, at LVR below 65% (don't quote me on this), you can have a 15 year loan, so smaller repayments.

 

Hi all ye experts,

Looking for some critiquing

So I'm looking to invest some money through the Nab Builder product and have calculated some figures below.

Because I'm risk averse, I've calculated Interest rate at 8%, CG at 3% and dividend at 4%. Please let me know if this looks ok.

Also please let me know if if double counted or missed anything. Thank you

 

Double leverage into shares?

 

Could just buy $50k savings to pay off home loan, the re-draw and buy $50k worth of shares and use that as a guarantee for the other 50k

 

I am not licenced to comment on this...

 

Also on the spreadsheet i would add annual tax position - not including the principal repayments what would it cost to hold.

 

I would suggest you also add some calculations without leverage for comparison.
If you invest the $50k + $1k pa at a 7% total return without leverage you will end up in a very similar position with lower risk.

 

The tax calculation seems wrong at an eyeball.

Total interest is just under $4k (assuming this is because of P+I loan)

Grossed up income is $5.2k per your spreadsheet.

That would make you positively geared so I don't understand how you then deduct all the interest at your tax rate.

Sticky made an excellent suggestion. You can prove any method of investment is wise by wiggling the numbers, yours show one potential future.

 

Franking credit calculation is wrong too.

Assuming 100% franked at 30%. Then the franking credits should be ~$1714.

 

Didn't even consider that.

SS doesn't take into account a growing income stream either, decreasing interest paid due to Equity builder been P+I.

 

Thanks guys

 

What are they charging nowadays on the equitybuilder?

 

Still 4.95%

NAB Equity Builder

 

Has anyone negotiated rates on this product?

 

4.95% is pretty good compared to Margin

 

@Martin73
I was reading on another site that NAB charges (.80%) brokerage for this set up when executing trades?

 

@Redwing - sorry for the delayed response. That's not correct.

In the guide on how to operate your facility it states:

All purchases of ASX securities will be transacted at the prevailing market price and will include brokerage.

 

What's the brokerage?

 

Hi guys, interesting thread. Does anyone know the process when the loan is paid down. Does nab hold the shares in trust? What are the costs to transfer? There wouldn't be any CG tax?