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no income, no experience, but some equity

Discussion in 'Introductions' started by alanc, 2nd Dec, 2007.

  1. alanc

    alanc Member

    Joined:
    28th Nov, 2007
    Posts:
    11
    Location:
    North Coast, NSW
    Good morning and happy one week anniversary of the Rudd Labor ascendency. So far, okay.

    This is my first post - anywhere, really. Here's my story. I live in my partner's house, in which we have about $200K unused equity. I have about the same amount of unused equity in my rented house, which has pretty neutral gearing. My partner and I are both writers with unpredictable income to say the least. I've inherited some money which will allow us to live without outside income for one year, which I see as a sound investment in future income. I'm keen to use our lazy equity to produce more income and growth. We've decided at the moment not to buy another investment property, mainly because in the present market it seems all but impossible to borrow 100% and still find a property which isn't income negative - and neither of us have ever experienced anything approaching a tax 'problem' which would make negative gearing useful.

    The share market, however, is highly volatile at the moment, with lots of talk of an imminent recession, or at least slowdown. I still want to invest and feel sure that income and growth can be realised even in a falling market, if I choose the right investment. I don't want to trade myself because of all the time - and energy - it sucks, so I'm looking for funds to invest in. I'm keen to have at least some money in ethical investments and it seems logical to me that there's money to be made with companies trading in new sustainable technologies.

    I guess the two big questions are - at the present time, should I borrow against our houses to invest in the market? And, where are the best places to invest?

    thanks a lot in advance, alanc.
     
  2. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    Regarding funds, perhaps something like:

    * 25% of your money in Hunter Hall's Global Ethical Trust which has an ethical screen (it doesn't specifically hunt ethical companies, but it does filter out unethical companies eg tobacco, firearms)

    * 75% of your money in a generic ASX200 fund whether it be a low cost index tracker like Streettracks or something like Colonial First State's Imputation Fund

    Regarding the decision to borrow against your house, it probably comes back to how well you can service the debt. If you can I would suggest you go for it, but I'm not a financial advisor. You might only get a 5% yield on the managed funds and you're probably borrowing the money at about 8%, so you're having to cough up the shortfall and hope the growth outstrips the shortfall. I don't think that's asking for too much.
     
  3. alanc

    alanc Member

    Joined:
    28th Nov, 2007
    Posts:
    11
    Location:
    North Coast, NSW
    Hi Glebe,

    Thanks for this advice. I was thinking of Hunter Hall - and I was also wondering if anyone had experience of NavraInvest.

    alanc