Any point taking out margin loan if I have enough cash to buy outright?

Hi all. I've learned so much from this forum.... it's brilliant!

So this is my situation. I've recently sold my PPOR, and have $480k sitting in a savings account earning about 6%. I'm holding off buying another place for a few months as I'll be moving interstate.

I want to start investing in managed funds. Is there any advantage in taking out a margin loan when I've got $480k cash in the bank? I was thinking that this way the interest on the loan would be deductible and I wouldn't have to touch too much of the deposit for my future home.

If I took out a margin loan, is it possible to have an offset account so that I don't pay interest now, but can still deduct the interest in the future when I redraw the money?

Thanks in advance!

Karen

 

You can't invest in managed funds with a margin loan and you only have two options when it comes to interest:
1. fix the interest rate and pay for the whole years interest up front

2. leave it variable and the interest charges come out of your account at the end of each month.

Regardless of which way the shares go, you are going to pay interest no matter what if you take out a margin loan.

 

Why can't you invest in managed funds, with a margin loan?






Johny.

 

Sorry you're right, you can use a margin loan to buy units in a managed fund.