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  1. #21
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    Quote Originally Posted by voltage View Post
    Buffett never recommends leverage into stocks. Only purchase stocks with surplus funds. How do you know where the bottom is? It can get a lot worse. I do not think this will be over in 3 months but only when a vaccine is produced.
    Which means do not buy stocks until your mortgage is repaid, otherwise you are gearing by choosing to use borrowed money over your pocket money. That advice, if followed, would crucify the share market.

  2. #22
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by voltage View Post
    Buffett never recommends leverage into stocks. Only purchase stocks with surplus funds. How do you know where the bottom is? It can get a lot worse. I do not think this will be over in 3 months but only when a vaccine is produced.
    And if you have access to zero rates like the major Banks in the USA .. or some countries around the world like Denmark’s Jyske Bank JYSKY, -3.81%, is now offering a 10-year fixed-rate mortgage at negative 0.5%.

    Additionally, Finland-based Nordea Bank will offer a 20-year fixed-rate mortgage in Denmark that charges no interest, and the bank is preparing for the possibility of home loans up to 30 years in duration having negative rates. Currently, the rates on 30-year fixed mortgages average just 0.5% in Denmark.

    When a mortgage rate is negative, a borrower still must make monthly payments toward their principal, but they ultimately pay back less than they originally borrowed. They would, of course, still have to pay other costs and fees.
    People don't have ideas, ideas have people

  3. #23
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    As a conservative investor I re-iterate that one shouldnt buy shares with borrowed money. The companies mostly already have debt and highly likely other people are leveraged into their positions which all makes a mountain of debt when risk off becomes in vogue and what we have just witnessed occurs.

    It is hard to take this stance when you have access to funds and the market is going up = but if one cant purchase ones shares outright then one shouldnt be playing the game.

    One should have a lot of other non equity investments alongside any share portfolio. That percentage of equityinvestments to debt investments can change though , so that is how you up the ante if you choose to, you drawdown your cash and TD's and sell your bonds to buy more equities.

    I'm doing that a little at the moment.

    JBMurc , I knew some countries were negative but I didn't realise banks were paying people who borrow !! Does my head in.





    Although if we get
    For clarity, nothing I say is advice....

  4. #24
    Senior Member Entrep's Avatar
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    Ethics aside, you think the private equity industry shouldn't exist then, management buyouts?

  5. #25
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    Quote Originally Posted by Entrep View Post
    Ethics aside, you think the private equity industry shouldn't exist then, management buyouts?
    no not at all.
    its just a question of risk for me. its too risky as an individual investor to leverage. I'm picking its the leveraged who caused the extreme downside recently and I imagine some of them are hurting hard because whoever lent them the money will sell at any price once the margin call is unpaid.
    For clarity, nothing I say is advice....

  6. #26
    Senior Member Entrep's Avatar
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    Agree that leverage like with CFDs or Commsec etc is risky but I am talking about a loan secured over my home. There is no margin call that can be made

  7. #27
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    Quote Originally Posted by Entrep View Post
    Agree that leverage like with CFDs or Commsec etc is risky but I am talking about a loan secured over my home. There is no margin call that can be made
    yes there is, when the value of your house falls below the equity you have in it including the shares. Then you lose your job and cant pay the mortgage.

    You cant absolutely rely on dividends or your job , you might get sick or be unable to work and health insurance doesn't cover it for example.

    Only you can judge the risk on these possibilities but bad stuff can happen to anyone.
    For clarity, nothing I say is advice....

  8. #28
    Senior Member Entrep's Avatar
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    Quote Originally Posted by peat View Post
    yes there is, when the value of your house falls below the equity you have in it including the shares. Then you lose your job and cant pay the mortgage.

    You cant absolutely rely on dividends or your job , you might get sick or be unable to work and health insurance doesn't cover it for example.

    Only you can judge the risk on these possibilities but bad stuff can happen to anyone.
    Of course that, I didn't think that needed to be said. That's not a margin call in the traditional sense of the word. If I spend $100K on a car (instead of mortgage, or buying shares outright) and then lose my job and crash the car, and can't pay my mortgage, and they foreclose, I don't think it's called a margin call.

    This thread is about utilising home loans for shares. Not opening up a leveraged trading account.

  9. #29
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    Quote Originally Posted by Entrep View Post
    Of course that, I didn't think that needed to be said. That's not a margin call in the traditional sense of the word. If I spend $100K on a car (instead of mortgage, or buying shares outright) and then lose my job and crash the car, and can't pay my mortgage, and they foreclose, I don't think it's called a margin call.

    This thread is about utilising home loans for shares. Not opening up a leveraged trading account.
    well imho everything needs to be said otherwise folks assume.
    margin call / bank recall - its all the same effect if you have no cash or cashflow.
    Did you know that your mortgage can be called at any moment!!??
    For clarity, nothing I say is advice....

  10. #30
    ShareTrader Legend Beagle's Avatar
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    You should never risk the safety and security of your family home for shares. That's gross recklessness in the current circumstances in my opinion.

    This is going to be really bad https://www.nzherald.co.nz/nz/news/a...ectid=12321458
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  11. #31
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    Quote Originally Posted by Beagle View Post
    You should never risk the safety and security of your family home for shares. That's gross recklessness in the current circumstances in my opinion.

    This is going to be really bad https://www.nzherald.co.nz/nz/news/a...ectid=12321458
    Exactly, Beagle! I'm not sure that everyone realises the gravity of the situation yet.

  12. #32
    Senior Member Entrep's Avatar
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    Quote Originally Posted by Beagle View Post
    You should never risk the safety and security of your family home for shares. That's gross recklessness in the current circumstances in my opinion.

    This is going to be really bad https://www.nzherald.co.nz/nz/news/a...ectid=12321458
    You risk it every day you put money into something other than your mortgage and whether it is reckless or not depends on a number of factors including equity, salary and industry which I didn’t specify and don’t intend to

  13. #33
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    Quote Originally Posted by macduffy View Post
    Exactly, Beagle! I'm not sure that everyone realises the gravity of the situation yet.
    Yes I agree except conversely gravity = potential opportunity for investors

  14. #34
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    Reckless, had good a laugh. It's reckless to have all your money in property.

  15. #35
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    Quote Originally Posted by Entrep View Post
    You risk it every day you put money into something other than your mortgage and whether it is reckless or not depends on a number of factors including equity, salary and industry which I didn’t specify and don’t intend to
    absolutely, all these are factors that come into your decision making, including your degree of risk acceptance, your insurance cover, a 2nd income , no. of kids, which is why we can only go by the guideline - which is don't do it.

    If you know all these things and they are well sorted then you may be able to come to a decision to ignore all the advice , take the risk, and in 5 years time you'll be laughing your way to a mega portfolio - maybe.
    For clarity, nothing I say is advice....

  16. #36
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    Quote Originally Posted by peat View Post
    absolutely, all these are factors that come into your decision making, including your degree of risk acceptance, your insurance cover, a 2nd income , no. of kids, which is why we can only go by the guideline - which is don't do it.

    If you know all these things and they are well sorted then you may be able to come to a decision to ignore all the advice , take the risk, and in 5 years time you'll be laughing your way to a mega portfolio - maybe.
    I concur with you Peat.
    Tick
    Low interest rates for a while.
    What happens when all the helicopter money is looking for a return
    Mega potential for portfolio returns as per 2009
    Just be wary if inflation picks up
    Mega potential for portfolio slashed also so I have diversified portfolio of investments

    Revolving credit available & ready.less risky than CFD's
    Last edited by kiora; 02-04-2020 at 04:56 AM.

  17. #37
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    Quote Originally Posted by peat View Post
    your insurance cover,
    maybe needs to be clarified what should be put into place

    If I was taking risks relying on my income I would stump up for some sort of permanent disability insurance , and life insurance with enough cover to buy the portfolio outright and provide sufficient income for the wife and kids.
    Unexpected stuff can happen, and you should see these insurance costs as the price for taking on extra risk and mitigating that risk wherever it is possible to do so.
    For clarity, nothing I say is advice....

  18. #38
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    Quote Originally Posted by Entrep View Post
    You risk it every day you put money into something other than your mortgage and whether it is reckless or not depends on a number of factors including equity, salary and industry which I didn’t specify and don’t intend to
    The choice with money, to put it into your mortgage - or into another asset, can't ever avoid the risk of choosing the worst option.

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