Shares & Funds Using equity to buy shares

Discussion in 'Accounting & Tax' started by The_good_life, 17th May, 2024.

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  1. The_good_life

    The_good_life Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    190
    Location:
    NSW
    Hi all,

    I've got a reasonable amount of equity released through a refinance/split loans (few years ago) untouched.
    Initial intent was to put funds towards another IP but exploring other options now.
    Could I invest a portion of the new split loan into shares (VAS/VGS/other ETFs or bonds) and claim the interest back?
    If yes, what's the best way to do this i.e. move money out to trading account (Same bank?) then buy?
    With current interest rates, the returns would need to be above 6.5 approximately to justify spend (not counting dividends etc.?)

    Looking for insights into what people think/do with released funds through refinancing (equity) sitting dormant?

    Thanks
     
    Last edited: 17th May, 2024
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Gold Coast (Australia Wide)
    Well selected shares ETFs are also growth assets over time, but do present more risk than property due to daily valuation.

    Risk is much lowered by not using a margin lend.

    ta
    rolf
     
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  3. Trainee

    Trainee Well-Known Member

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    Why exclude dividends from returns?
     
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  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    ETFs dont pay dividends. They pay trust distributions. NET yield is usually lower and franking is not assured and may be limuited but some of the income could be discounted gains. Usually you want yield to match or exceed interest. Unlikely without a tax shortfall on top.
     
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  5. The_good_life

    The_good_life Well-Known Member

    Joined:
    19th Jun, 2015
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    Location:
    NSW
    Thanks all and fair points to consider.
     
  6. tk421

    tk421 Well-Known Member

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    Perth
    franking credits
     

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