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Case study using gearing
While I have most of our listed property trusts as directly held I also have been using CFDs to add to the mix.
Below is the position starting in October 2008 (rounded to hundred dollars)
Underlying value of shares purchased using CFDs.............................................. ........... $30,000
CFD margin............................................ .........................$3000 (later $4500)
Maximum drawdown.......................................... ..............$4200
Current value............................................. .................................................. ............ $38,500
Financing cost.............................................. .................................................. ...........($2,900)
Dividends received.......................................... .................................................. ..........$4,700
Current net gain.............................................. .................................................. .........$10,300
Return on investment ($7200 maximum).......................................... ................................143%
OK drawdown could have been greater but period includes the market collapse of 2008/9 which was unusually demanding on many share values.
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