Hi
I've been fiddling in excel in an attempt to get my head around the LOE issue. The attached spreadsheet is where my thinking is at.
Comments made by Bill and Steve got me thinking.
To try and be faithful to (my understanding of) what Steve is saying, in the spreadsheet:
1. Interest accrued on the margin loan is capitalised to the loan.
2. Where the CG of the managed fund does not support the capitalisation of the margin loan interest - as a result of the desired LVR - then a top up amount into the margin loan is made from the LOC (to bring the margin loan precisely back to the desired LVR)
3. Rents increase (from their initial yield) at the average of CG and CPI (set at 3% for the 20 years).
A few random points:
- Crudeness aside, I think this spreadsheet can shed some light on the whole LOE issue
- I have not invested a great deal of time building the spreadsheet. It has not been tested to deal with every scenario. So if you fool it into accepting negative LVR's etc, don't hold it against me.
- The numbers I have plugged into the spreadsheet initially (CG, yields, interest rates, etc) are purely illustrative. They do not neccesarily reflect what I believe the future may hold. Change them at will (and yes, the spreadsheet does accept negative CG inputs)
- Pick it to pieces (I really dont mind) and suggest ways it can be improved. But if you do go away and improve the spreadsheet, then please post the improved version on the forum.
- Like any simulation this can only approximate reality.
- What you put into the model, is what you get out of it.
And just two final things:
1. I have never met Steve Navra (or any of his advisers), never been to one of his seminars, nor am I an investor in any of his managed funds.
2. I am not an investment adviser and this is not investment advice.
Enjoy
Mark
I've been fiddling in excel in an attempt to get my head around the LOE issue. The attached spreadsheet is where my thinking is at.
Comments made by Bill and Steve got me thinking.
To try and be faithful to (my understanding of) what Steve is saying, in the spreadsheet:
1. Interest accrued on the margin loan is capitalised to the loan.
2. Where the CG of the managed fund does not support the capitalisation of the margin loan interest - as a result of the desired LVR - then a top up amount into the margin loan is made from the LOC (to bring the margin loan precisely back to the desired LVR)
3. Rents increase (from their initial yield) at the average of CG and CPI (set at 3% for the 20 years).
A few random points:
- Crudeness aside, I think this spreadsheet can shed some light on the whole LOE issue
- I have not invested a great deal of time building the spreadsheet. It has not been tested to deal with every scenario. So if you fool it into accepting negative LVR's etc, don't hold it against me.
- The numbers I have plugged into the spreadsheet initially (CG, yields, interest rates, etc) are purely illustrative. They do not neccesarily reflect what I believe the future may hold. Change them at will (and yes, the spreadsheet does accept negative CG inputs)
- Pick it to pieces (I really dont mind) and suggest ways it can be improved. But if you do go away and improve the spreadsheet, then please post the improved version on the forum.
- Like any simulation this can only approximate reality.
- What you put into the model, is what you get out of it.
And just two final things:
1. I have never met Steve Navra (or any of his advisers), never been to one of his seminars, nor am I an investor in any of his managed funds.
2. I am not an investment adviser and this is not investment advice.
Enjoy
Mark
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