Attn: People who use Commsec - Query

Discussion in 'Sharemarket Investing Platforms, Tools & Services' started by Sk3tChY, 9th Aug, 2007.

Join Australia's most dynamic and respected property investment community
  1. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    344
    Location:
    Sydney, NSW
    So would you suggest I go with DRP with my CBA and SGB shares, i'll probably be holding them for at least 2-3 years i'd say, getting a larger margin loan as I invest more of my own capital.
     
  2. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,393
    Location:
    Sydney
    Depends on your strategy - if you are trying to accumulate as many shares as you can, DRP is a good idea, especially if there are discounts available for those reinvestments (even just avoiding brokerage is a good discount).

    But on the flip-side, if the share price trends down over that period (bear market), you're going to be progressively losing more money as you buy more of a falling share.

    Depends on your strategy and your goals for that money.

    If you are also using a margin loan, you will have a cashflow problem if you reinvest all of your dividends, unless you also capitalise your interest, in which case you need to make sure you are seeing returns well in excess of the prevailing interest rate to ensure your LVR is not blowing out to margin-call territory !!

    These decisions are not easy - but you can change your mind (provided you keep things flexible !!!), so just make a decision and keep learning :D
     
  3. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    344
    Location:
    Sydney, NSW
    What you mean by 'capitalise' my interest? Add it to my loan?

    And i've decided to DRP until interest repayments get up to a point where i'll need the dividends to help me pay em off.