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Stupid Question

Discussion in 'Managed Funds & Index Funds' started by steveadl, 14th Jul, 2007.

  1. steveadl

    steveadl New Member

    Joined:
    1st May, 2007
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    Location:
    Adelaide
    Hi all, I'm just looking into managed funds for the first time and have a really basic question.

    If the Bank of QLD says they'll lend 75% on the Navra fund, how much will the margin loan they approve for me be if I was going to invest $10,000 into Navra?

    ie. is it $10,000 (me) + $7,500 (BoQ) = $17,500 total in fund

    Cheers
    Steve
     
  2. Bantam Roosta

    Bantam Roosta Well-Known Member

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    Location:
    Canberra, ACT
    No. It's $40k. $10k you, $30k BoQ.

    They will lend up to 75% of the value, meaning you only need to put up 25%. This of course would mean you would be fully leveraged and I certainly wouldn't recommend it but yes, this is what you could get. At 50% lend they would give you $10k.

    BR
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The formula to work out how much you can invest is:

    Investment = Cash / (1 - LVR)

    Where Cash = the amount of cash you can put in ($10K) and LVR is the loan-to-value ratio you will use.

    Example. $10K to invest, and you want to gear to 60%, means you'll have 10 / (1 - 60%) = (10 / 0.4) = $25K to invest (of which $10K is your money, and $15K is borrowed).

    Another example: $10K to invest @ 75% = 10 / (1 - 75%) = 10 / 0.25 = $40K to invest, $30K of which is borrowed.
     
  4. steveadl

    steveadl New Member

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    Thanks for that guys, thought I had something wrong :rolleyes:

    Cheers
    Steve
     
  5. Bantam Roosta

    Bantam Roosta Well-Known Member

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  6. bundy1964

    bundy1964 Well-Known Member

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    I would have to say that is the most useful calculator for a margin loan around, I will have that open during trading days :D
     
  7. handyandy

    handyandy Well-Known Member

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    Sydney Nsw
    Great calculator BR. The problem with it is that at any time BT can pull it down with some change to their site.

    Maybe it could be possbile for Sim to put his calcualtion with the same variables in a page linked directly to invested??????

    In this way we will know that these type of useful caculators will not disappear.

    Cheers
     
  8. Bantam Roosta

    Bantam Roosta Well-Known Member

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    If you want to keep the page for yourself, when you go to the site, right click on the page (not on a link) and click 'save page as', then store it where ever you want and you then have the page forever more.

    This is fine for personal use, but you couldn't then upload it to a public server. BT might get upset.

    BR
     
  9. Glebe

    Glebe Well-Known Member

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    Come on guys, the Excel formula has already been provided!