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savings gearing plan

Discussion in 'Managed Funds & Index Funds' started by voigtstr, 24th Nov, 2007.

  1. voigtstr

    voigtstr Well-Known Member

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  2. voigtstr

    voigtstr Well-Known Member

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  3. samaka

    samaka Well-Known Member

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    What's a savings gearing plan? Do you mean regularly investing in managed funds - then increasing the margin loan to match?

    EDIT: Just found this page Suncorp - Instalment Gearing
     
  4. voigtstr

    voigtstr Well-Known Member

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    That's the one. I wonder if I should cancel the savings plan I have direct with CFS before applying through Suncorp?
     
  5. Simon

    Simon Well-Known Member

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    I really like the look of the product Leveraged Equities has - Wealth Builder I think it is called.

    If I was starting out today this is what I would use I think.

    Never looked at any others - how does it compare with the one you are considering?
     
  6. voigtstr

    voigtstr Well-Known Member

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    From Sim's site, only Suncorp and St George supported both funds I have
    Navra (75% margin) and CFS geared (65% margin) (I was going to be conservative and try to keep a 50% margin). I'm about to head off to work, but I'll check LE out when I get there.

    Cheers
    Simon (there's lots of us isnt there)
     
  7. Simon

    Simon Well-Known Member

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    Navra comes and goes off LE list. But once you own some they usually let you buy more. Or maybe that is just because I have been with them so long. They give me a decent discount too because of that.

    I am always happy to give my loyalty to a company who give me theirs - is such a rare thing these days.

    Cheers,
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I refinanced half of my portfolio (including Navra) to St.George at the beginning of this year, but then refinanced it all back to LevEq recently because of the relatively poor service (compared to LevEq) I was getting (plus running two margin loans proved to be more of a nuisance than a benefit, and I was getting slightly better interest rates with LevEq too).

    My account manager at LevEq has recently got a promotion (I knew she was good!), so it will be interesting to see how my new account manager performs. At least I can still go complain to my old account manager if I'm not getting the service I'm used to.
     
  9. voigtstr

    voigtstr Well-Known Member

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    what are the pros of LE over Suncorp?

    customer service? Interest rates?
     
  10. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I've never used Suncorp, so I can't comment.

    From what other people have mentioned around here, I think that Suncorp have been pretty aggressive with their pre-paid interest rates (trying to buy market share I'd guess) ... and I also note that they offer pretty aggressive LVRs too (about on par with St.George).

    I seem to remember some negative comments about Suncorp's customer service (or lack there of), but again, I have not experienced this, so I can't comment.
     
  11. hiflo

    hiflo Well-Known Member

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    Voigtstr

    What are you trying to do?

    Invest with geared instalments into two funds: ie Navra and CFS every month?

    I think its a good idea, even though I stopped in June last year to have some more cash buffer for buying a property next year. My LVR was around 55% for geared instalments for Navra. Mind you each would have a minimum monthly instalment.

    For example I only wanted to make total contributions of $100 my own money and $100 from the margin as at that time most of my laboured income went into managed funds (without gearing). But the mininum monthly instalment for ANZ was $200. Therefore, I had to fork out at least $200 a month from my own pockets. Not much of a difference, but at that time $450 & $200 a month was a BIG difference in my eyes, that is until I got used to seeing the figure.
     
  12. voigtstr

    voigtstr Well-Known Member

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    yep hiflo, thats the plan, invest in both funds, building them up so that the distributions will cover the holding costs of property further down the track.

    I sent Leveraged equities an email asking if they'll accept Navra as a security even if its not (currently) on their acceptable securities list. I should have asked them what LVR they would offer on it as well.
     
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    LevEq offer 70% on Navra AUS funds.
     
  14. voigtstr

    voigtstr Well-Known Member

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    That should be good enough for me, I'll try to keep my margin at 50%. How come they dont list on it their current securities list? Can they turn around a few months down the track and say, sorry the lvr is now 0% on Navra?
     
  15. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    They have a limited allocation of money that they will lend on any one fund - if you look at the acceptable securities lists, they often indicate where a fund is approaching or has reached their limit. There's usually quite a few of them.

    Part of the problem for LevEq was that they were one of the first lenders to offer Navra as security, thus they were pushed pretty hard by NFS and everyone investing into the Navra funds - which grew very quickly. They reached (and have increased) their limits several times.

    Any lender can in theory do this - in practice they generally wouldn't ... they will just stop allowing people to make additional investments or at least stop new investors. It's a pretty easy job to refinance your margin loan if you need to - just a form from your new margin lender to fill out and send in. Not that I'd suggest doing it too often - can make the paperwork a bit of a pain.
     
  16. Simon

    Simon Well-Known Member

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    This happened to me the last time I bought additional units. I had noticed Navra was off the list and when I approached them they agreed it was but said I could keep buying as much as I wanted.

    I thought it was that I was special but Sim has just informed me above that it is because I am an existing client. :(

    Don't worry too much about this. If it is restricted it will be because it is popular rather than because it is a poor investment. When it has been deleted from their list it always comes back after a while.

    Cheers,
     
  17. voigtstr

    voigtstr Well-Known Member

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    so I can still apply for the wealthbuilder scheme using navra retail and cfs geared using my existing units as security, and drip feed $160 a month until next year (when cashflow is better) and start putting in $2000 (half from me, half from the missus) a month. The returns from the funds after a year or so should be plenty to pay for holding costs on an ip.
     
  18. DaveA

    DaveA Well-Known Member

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    Are you paying that 2000pm from wages?

    This will effectively mean that next year when you buy ur new ppor youll have a large amount of shares which could be deductable but arnt, and a large non deductible debt.

    Can you get a LOC on your current ppor so this is more effective?
     
  19. voigtstr

    voigtstr Well-Known Member

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    I'll be using a loc on the current ppor for the purchase costs of the next ppor.

    The distributions from the funds were intended to pay (a) margin interest (b) loc interest and (c) rental shortfall (for the current ppor which will become a rental when we get our next ppor).

    This way loc on the current ppor would pay the 30k purchase costs on the new place, and the fund distributions would pay the holding costs of old place.

    how did you want to make this more effective?
     
  20. DaveA

    DaveA Well-Known Member

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    use the LOC to pay for the funds. this will lead to the overal highest deductible debt

    Depending on how close ur numbers are (ie can you invest 40k into the market and pull out the 30 needed via a margin loan); you could drip feed ur LOC into the shares like you are now (if ur looking for dct). Then when new ppor comes around use a margin loan to pull out the deposit for the new property (if you plan to make it an ip eventually)

    if you dont plan to make it an IP, juse the LOC & Margin loan like your doing now (however replace your salary money with the same money from the loc) and use the cash from wages (that you would of used for ur monthly share plan) and save that to use as ur ppor deposit. This way when you move in the LOC is deductable and your minimising bad debt on the ppor