hi all,
I'm looking to borrow $200k or $300k against my property, to invest either directly in shares, or in an ETF.
What's the best way to go about this?
a) which bank would offer a competitively priced loan?
b) should I contact any financial advisors / accountants about setting up the appropriate structure?
thanks
I don't doubt it's above board - though it's not like a investment firm has ever been dodgy/misleading with it's synthetic/packaged derivatives before.
I do just think that there's a curious crossroads coming together which is amateur risk averse investors are heading to ETF's in droves - and buying at perceived good points but there's seemingly a significant lag in the changes in the underlying equities that make up these ETFs and the ETF's prices themselves, which are NOT 100% reflective of how it's components are doing but instead the S&D for the ETF itself….which of course are two completely different things.
If you're buying really big ETFs like the Vanguard ones, there's so many institutional investors on those I'd expect the reactions to be true - if still delayed - but for smaller ETFs, I reckon there's a big potential for big lags and significant pricing corrections later due to the asset component of them changing.
Its not the timing in the market …. its the time in the market
Or something like that
Leave the top and bottom to people who can afford to gamble with other people’s money
cheers sian72, agreed
EQUITY MAAAAAAATTTTEEEE!
(Sooner this whole concept of magic property money disappears the better, though I know I'm dreaming)
Qantas shares were around $6 a month ago, I think their around $2 now?
I really see that an easy money, you cant go wrong with bank shares either. They'll fully recover long term I believe.
Is there any websites where you can look at share history to check how far they dropped at other points where the economy slowed, and how long the recovery?
Qantas shares were around $6 a month ago, I think their around $2 now?
That is usually a sign of a problem in the fundamentals. Have you looked into why id dropped? or do you only look at the price?
I can list hundreds of shares that have lost 66% of their value in 6 months. Do you recommend we buy them?
same situation as you but i'm lucky I chose to accumulate a lot of my 'principal repayment' in my offset when interest only loans were still a thing; precisely for moments like this. I took half of the funds sitting in my offset and invested in ASX20's top 10 biggest losers. You are in good company here. Blue chip stocks only - Big 4 banks, BHP, WPL, RIO, FMG, etc if you are seeking mid to long term gains with little risk. (these are the companies that the government are likely to bail out if any crisis were to hit).
I structured my portfolio so that even if it bounces back to a fairly conservative late Feb valuation long after covid-19 was discovered, i'll still be looking at 40-50% gains including dividend yield. If it somehow recovers to where it left off pre-virus, it'll be circa ~60% return.
I’d leave WPL , BHP as if you haven’t noticed the world is flooded in oil with no demand . Puts only .
not currently. i'm holding out until the coronavirus madness goes away. I'm sure oil & gas will pick its way up this time next year with China right back in the mix, or at least recover 30% of what it was before the pandemic and I'd still do better than my home loan. Which reminds me, what a time to be an aussie investor, the cost of equity is likely to fall another 25bps soon.
Are we at the bottom now fellas? Or we still going down?
Depends on the sector.
So, which eft to pick on vanguard? There seem to have a few in there? What would one expect to pay in fees
Someone made this, I found it useful because it put things into perspective.
'Are we there yet?'
Let me look into my crystal ball and get back to you in 8 months…
Thanks for sharing.
Should get hit harder than 2007. QE already in overdraft mode for many years.
It is a game of zero sum. Can't be right when everyone has been on the + side since 2007.
I would like to see that graph with days to recovery also. Fast to fall smells of overreaction to me, perhaps fast to recover too??????
I've not seen a graph for it, but textually it's here, I'm not going to steal the content. It seems to do with the pullback and crystal balls. The occurrence in 1987 for example, only took 3 months to dive, but needed 20 months to recover. I'm not aware of the market in 1987 so I can't comment.
What's different with ETF from say Vanguard or SelfWeath: http://etf.selfwealth.com.au/ vs directly buying like A200 or IVV (for ASX500) ?
The ETF by selfwealth is .88 MER
Selfwealth is just a cheap brokerage company. Definitely worth using if you're just a long term investor.
Vanguard MER for the same thing is cheaper
A200 asx200 0.07 and IVV S&P500 0.04 are very low MER options for investing in Australia and the USA.
Soloactive index tracker (used by betashares) is asx tracking fee free (or cheaper, I forget exactly), to try and save money over other asx tracking index funds.
Thanks. so basically they are all equivalent in terms of underlying goal. So, might as well go with buying directly IVV S&P500. Its just $10 or so per trade
Give IWLD and the hedged version a look in. Definitely the least volatile during this period, to my eyes.
If selfwealth were to go broke would you lose your money invested in their etf?
what i don't like about etfs is they aren't very liquid, so you lose 2% on the buy/ sell spread….
or SELF would cost you $41.61, but you'd only get $32.50 if you sold - that's a 22% loss just on the spread.
@SlickMick: No you wouldn't lose your money, it would be held for you and transferred to another broker, if it came to that.
ETFs are very liquid AEBE, in my experience. Have never had a problem selling within an hour or two. I usually bid lower by a reasonable amount, someone is always looking to sell.
Buying in minimum lots of $5000 is recommended, same goes for selling.
@Oofy Doofy: If all things were being equal they'd be very liquid, but I'm yet to see an ETF with a sell price even nearly equal the buy price.
@SlickMick: A good write up on this particular:
https://investornews.vanguard/why-are-there-so-many-etf-pric…
@Oofy Doofy: Okay, maybe an expert saying it helps:
"The difference between the bid and the ask is called the bid-ask spread. It’s a cost related to buying and selling ETFs and an even more detailed indicator of current supply and demand than the market price. Other than an ETF’s expense ratio, the bid-ask spread represents another cost that could affect your returns.
The bid-ask spread is also a good measure of liquidity, which refers to an ETF’s ability to quickly and easily be sold for a fair price and converted to cash. Vanguard ETF® spreads, for example, generally range from $0.01 to $0.25, which worked out to around 0.02% of each fund’s price, on average, in 2018."
In 2018, they reckon the spread was 0.02%. That's be okay. But at the moment they're 100 times that!
@SlickMick: Supply and demand is causing the jump in spreads. Vanguard was explaining how there's a penalty for leaving bonds atm, due to all the market uncertainty.
If you're a buy and hold investor, the buy/sell spreads don't matter.
i think its a great idea and I'm planning the same thing. Just going through loan application with the bank. 3.84% interest only.
I'm planning to drip feed money into the market. Something like 10% every 3 weeks, so will take about 30 weeks to be fully invested. Will probably just go with ETFs although may go a few shares I've got high conviction in.
Sure markets could fall further, but so long as you are not a forced seller you can ride it out and be there for the recovery whenever it comes.
I remember when the GFC was in its darkest days and markets were around the 3,500 levels. Armchair experts were saying not to invest until it reaches 2,500, it will be there in a matter of months. Well 6 months later markets were back up to 4,500. Don't trust the experts you see on the internet.
That's why the super bosses said to remain calm and that it is a long term game - get all your $ into cash until things are more settled.
Anyone else still shorting Qantas? Not being cheeky, more so out of curiosity.
I am in the process of starting a similiar plan. 30 year investing time frame. Have you heard of Motivated Money and Peter Thornhill?
Well worth the read.
Fantastic introduction podcast below.
https://www.aussiefirebug.com/coronavirus-market-crash-with-…
The best line of credit seems to be State custodians.
https://www.statecustodians.com.au/line-of-credit?utm_source…
Does anyone have any experience with state custodians? They don't have brilliant reviews. But what banks do?
Tap equity when you can and move it to offset perhaps.Do the rest as your risk appetite allows you to.
Can we get an update OP ? If you did NOT listen to anyone here actually invested in international shares ETF then you would've at least doubled your money by now!
In the end, due to procrastination and uncertainty over the best way to structure it for tax purposes, I didn't take out the loan.
Definitely a missed opportunity!!
Based on dow Jones/ASX growth, and assuming that I got the loan approved by mid April 2020, a conservative estimate would be an increase in value of 35 to 45%.
So the lesson learned here is, be ready for the next opportunity!
I like how OP would be up 70-80% if he took this bet. It's funny to read over the responses in this thread telling him he is dumb to buy when it keeps dropping. In reality, it was a sensational opportunity.
Man the OP is almost prescient. If he took out that loan, invested it in the US market, he would have gotten at least 100% return on investment and he can almost pay the principal for another property with that money.
Borrowing to invest is a two edged sword just as borrowing can boost returns, it can also boost losses. Can you sleep at night if the market craps out?
It's pretty easy to sleep during a crash.
I've because of bad timing bought two local tops before they crashed by -50%. What did I do? Well, I went all-in by DCA down close to the local floor.
They're now all green 90 days later and rising fast.
The point is people who want to make life-changing money take risks while those who are scared will find any excuse to not enter the market.
Nikko, I haven't looked into it in any detail, but I'd expect that these ETFs would trail behind the market by 3 to 5 days, and probably be averaged out. Then you'd also have fees being deducted at very regular intervals.
I'm sure that it's all above board…. haha