Gearing 101

[russki]

Whats the best way to gear up?

Margin lending seems to have high rates and has forced margin calls..

How about using the old Bricks and Mortar cash machine i.e. take out a loan using the house as security.. Bank Direct have 3years at 7.85%.. borrow 100g on house worth 800, with existing mortgage of 90g (i.e total borrowed 190g) .. and buy Oz stocks..

Any tax benefits in doing this? Laqc? Put the shares under missus' name as she has income of 0 per year?

Comments appreciated

[peat]

CFD's?
I wonder if you meant that when you referred to margin lending, or were you just meaning old fashioned margin lending.
You wont need to borrow the cash of the bank which will no doubt incur admin charges etc.. and you'd only pay the finance as and when you actually took positions.
I have no interest in suggesting them but I'm using CMC to trade forex mainly and its a pretty easy way to leverage in shares as well.

[Halebop]

I think if you have the home equity it would prove more economic for longer term holds and habitual trading than CFDs. Avoiding margin calls altogether is a substantial economic advantage, allowing you to be fully invested without the same threat of a liquidity crunch.

Personally I prefer not to borrow but have done so in the past when my greed or outlook convinced me it was worthwhile. CFD's are a relatively cheap instrument all the same ...but don't discount the the risks associated in dealing with a market maker. They may well take bets against you in physical markets based on their aggregate option risk. Additionally, your paper profits have little recourse if the market maker defaults. There is after all no real asset, just a promise to pay.