Originally Posted by
Enumerate
For a start ... I am not a registered financial adviser ... so I never, ever, ever make recommendations as to what or how to invest.
However, for my grandmother or mother in law, I would suggest that they investigate the following model.
Take their $100,000 and borrow a further $100,000 from the bank at 7.4% interest.
We have income requirements of $5,000 + $7,400 +28% tax for the interest. Hence we need $13,880 income.
We have $200,000 to invest ... but put aside $15,000 for the call account earning $600 per year.
We put $180,000 in SCF020 at 11.5% - earning $23,000 per year.
That leaves $5,000 for the SCFHA, as above, which allows us to buy the 38,500 units at 13cents yielding 5.71%. or about $2,198 per year.
Analysis:
If it turns to custard, we get pro rated $23,000 + $600 + $2,198 = $25,798 per year plus our $15,000 on call capital plus government guaranteed $180,000. We pay back the bank's $100,000, pay the $7,400 + 28% interest. That means we have $16,918 pro rated left - we take our $5,000 income and add the $11,918 pro rated to our income for the year.
If it all goes well ... we are in like a lizard drinking, as before!
All sorts of interesting models are possible when your basic capital is protected by the NZ government.