That is $45k extra you can pay off your non deductible debt per year. A huge figure considering some people's wages are less than this.
borrow funds against your IP to invest in fully franked equities..
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That is $45k extra you can pay off your non deductible debt per year. A huge figure considering some people's wages are less than this.
Slightly off tangent but is there a trust that you could hold the shares in for asset protection, but still claim the the interest expense of the loan which is in your personal name?
No there is not. 'Owner' would claim the interest - which is the trustee. A unit holder of a unit trust could claim the interest, but there is no asset protection.
2.3% yield is after tax and interest expenses (which you have ignored), you then get capital gains on shares on top of that (just like property). Obviously you wouldn't buy just one share, but it was just an example.
in your example:
$1,000,000 debt @ 4.5% = -$45,000
$80,000 Rent
-$12,000 expenses
Tax payable = -$7,935
Net income = $80,000(rent) -$45,000(interest) -$12,000 expenses -$7,935 (tax)
Net income = 15,065
so why are you settling for a 1.5% yield?
The margin loan interest is quite high.
Depends, I've got 4.10% margin rate and 4.45% home equity loan. But yeah, rack rates for small balances are 7% or something.
Yep, yield isn't static, the key is not focussing on initial yield but in growth of the underlying asset. Peter Thornhill always rants about "beware the yield trap" for this reason. Its a core tenet of dividend growth investing, the miracle of compounding.
Hi
I used this strategy in the past to pay off my home last year but shares are overpriced at the moment in my opinion.
Two years ago it was a great time to buy shares and the gain was great.
I made a 18% return for the last three years but shares are over priced.
I used this strategy in the past to pay off my home last year but shares are overpriced at the moment in my opinion.
Two years ago it was a great time to buy shares and the gain was great.
I made a 18% return for the last three years but shares are over priced.
Um no. XJO all time high is 6828 Nov 07. XJO is now 5664
One should not use pre-GFC highs as reference.
When one responds to a specific point, one does.
yes it's a fair point. I'm not interested in shares so I don't know, I thought they were at a high for some reason, thought I read or heard it the other day. Not that it matters what the index is at when you look at the broader economic situation.
Probably thinking of the ASX Accumulation Index (dividends + growth) which is at highs
Probably thinking of the ASX Accumulation Index (dividends + growth) which is at highs
exactly... yes that was it
thanks Redwingmeh, international shares are waaay better.
ASX has never recouped its pre-GFC highs.
US S&P 500 has been smashing records on the other hand.
the performance of ASX shares will be very much limited by the slowing resources and financial sectors, with iron ore prices dropping and with profits of the bank slowing in growth due to regulatory curbs.
as well, with the AUD dropping after the Feds raise rates, the exchange rate gains will magnify the performance of international shares.
(obviously most people here are only limited to knowing local stuff and mostly in property only.)
ASX has never recouped its pre-GFC highs.
US S&P 500 has been smashing records on the other hand.
the performance of ASX shares will be very much limited by the slowing resources and financial sectors, with iron ore prices dropping and with profits of the bank slowing in growth due to regulatory curbs.
as well, with the AUD dropping after the Feds raise rates, the exchange rate gains will magnify the performance of international shares.
(obviously most people here are only limited to knowing local stuff and mostly in property only.)
exactly (tho the lending curbs themselves aren't the issue so much as the state of the Sydney property market). But if you slice out resources, financials and retail... urghhh
I use a margin loan to purchase vhy.ax.
Them I let 'dividend reinvestment' work it's magic.
Them I let 'dividend reinvestment' work it's magic.
Both accumulation indices tell the story. Dividend imputation leads to far higher payout ratio in the form of franked dividends on the ASX compared to the S&P500. So look at total return as opposed to growth only. This is part of the reason, aside from the obvious that the bounce back has not been as strong when looking at growth indices.
I don't really have a dog in this argument, I hold direct stocks listed on ASX, NYSE, TSX, SIX and LSE. All have a place in the portfolio.
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