travolta
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Post by travolta on Jul 15, 2019 15:16:44 GMT
I think I have said this somewhere before , if you are looking for capital increase buy woodland (as far away from public access as possible.) Worth looking into. SSI grants etc.
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Post by samford71 on Jul 15, 2019 18:53:17 GMT
I am happy to be persuaded that borrowing money to invest on the stock market is a good thing to do. Perhaps you can do the maths for me? Let's start with what rate of interest can you borrow at to be secured against the share portfolio you intend to purchase with the lent money? Interactive Brokers offers margin loans at tiered rates: the first £80k at of 1.99%, from £80k to £800k at 1.49% and for £800k+ at 0.99%.
I've had a margin loan facility (which I don't currently use but it's available if I wish) since 2012. The current rate is 3m LIBOR+25bp (around 1% at the moment). Think of it just as a flexible credit line, secured by a portfolio of liquid assets (mainly funds in my case, rather than individual securities) that the bank act's as a custodian for.
Most of the people I know now use them to buy their house, rather than a conventional mortgage. The rate is lower, you only pay interest on the part of the margin loan you draw on, you don't need to repay the capital (so it's like an IO mortgage) and the bank will accept the unvested stock or deferred cash of the company you work for (or perhaps are a partner in) as collateral. You obviously would have to post more margin if the security posted dropped in value but most people are using it overcollateralized. For the bank, it's far superior to a mortage since they can value the collateral every day (or even intraday) and can sell it, unlike a house, instantly if required.
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Post by dan1 on Jul 15, 2019 18:59:26 GMT
IFISAcava - check out the HNW blogger firevlondon.com for their experience of using a margin loan from IB to finance their Dream Home in..... London, of course
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IFISAcava
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Post by IFISAcava on Jul 16, 2019 8:51:19 GMT
I am happy to be persuaded that borrowing money to invest on the stock market is a good thing to do. Perhaps you can do the maths for me? Let's start with what rate of interest can you borrow at to be secured against the share portfolio you intend to purchase with the lent money? Interactive Brokers offers margin loans at tiered rates: the first £80k at of 1.99%, from £80k to £800k at 1.49% and for £800k+ at 0.99%.
I've had a margin loan facility (which I don't currently use but it's available if I wish) since 2012. The current rate is 3m LIBOR+25bp (around 1% at the moment). Think of it just as a flexible credit line, secured by a portfolio of liquid assets (mainly funds in my case, rather than individual securities) that the bank act's as a custodian for.
Most of the people I know now use them to buy their house, rather than a conventional mortgage. The rate is lower, you only pay interest on the part of the margin loan you draw on, you don't need to repay the capital (so it's like an IO mortgage) and the bank will accept the unvested stock or deferred cash of the company you work for (or perhaps are a partner in) as collateral. You obviously would have to post more margin if the security posted dropped in value but most people are using it overcollateralized. For the bank, it's far superior to a mortage since they can value the collateral every day (or even intraday) and can sell it, unlike a house, instantly if required.
Thanks for this. V useful info. I guess you have to have a big whack invested to be able to finance a decent house purchase mind you.
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aj
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Post by aj on Jul 16, 2019 9:14:16 GMT
Interactive Brokers offers margin loans at tiered rates: the first £80k at of 1.99%, from £80k to £800k at 1.49% and for £800k+ at 0.99%. I tend to use my margin facility when I put in speculatively low buy limit orders. If the order doesn't fill, no problems. If it does, my leverage temporarily sits slightly above 1 while I decide what to sell. There's a sort of victorious feeling I get when my trade is the daily low price for a stock.
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james100
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Post by james100 on Jul 16, 2019 9:51:29 GMT
Interactive Brokers offers margin loans at tiered rates: the first £80k at of 1.99%, from £80k to £800k at 1.49% and for £800k+ at 0.99%. I tend to use my margin facility when I put in speculatively low buy limit orders. If the order doesn't fill, no problems. If it does, my leverage temporarily sits slightly above 1 while I decide what to sell. There's a sort of victorious feeling I get when my trade is the daily low price for a stock. Ah, the topic of IB margin loans cropped up only recently on this thread. So happy to learn I won't be nursing my financially destitute wounds alone. Those rates look good. I can do this with internaxx (they market it as both margin trading and personal loan facility) but the rates are nowhere near this attractive. Still, I am looking at using it to avoid/reduce an unexpectedly high CGT liability on assets that I would otherwise be liquidating in 1 go to fund a house purchase. I manage everything on a portfolio basis and make no differentiation between the origination of debt versus asset it's either secured on or used to purchase, except in overall terms of taxation and ability to finance it.
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aj
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Post by aj on Jul 16, 2019 10:46:18 GMT
As a CGT avoidance strategy it seems a viable option to me as long as your leverage would remain comfortably low after the house purchase.
Personally I'd feel much happier borrowing against property rather than my S+S equity. In a market crash, it is very easy for a broker to liquidate your equity holdings to protect their loan. In a housing value crash, banks have to follow a slow and complicated process to repossess property.
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IFISAcava
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Post by IFISAcava on Jul 16, 2019 10:57:36 GMT
I get it, but my mind can't help the gut feeling that it is more risky to take a margin loan than leveraging against a house purchase. Are there figures backing up my gut feeling, or am I just conditioned by the UK property ownership obsession?
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james100
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Post by james100 on Jul 17, 2019 10:18:48 GMT
As a CGT avoidance strategy it seems a viable option to me as long as your leverage would remain comfortably low after the house purchase. Personally I'd feel much happier borrowing against property rather than my S+S equity. In a market crash, it is very easy for a broker to liquidate your equity holdings to protect their loan. In a housing value crash, banks have to follow a slow and complicated process to repossess property. Absolutely to your first point, the question of leverage (or not) and how much is always critical. I've both forfeited potential returns through under-leveraging and taken profits just by being able to ride out dips with no leveraging...both in the same market. My tendency is to take insufficient risk so no worries there. On the point of source financing, I probably go the other direction, feeling more comfortable borrowing against non-property. Partly because I currently manage a low-volatility portfolio and it would be statistically unlikely to dramatically crash. Also, because I like the speed and non-binary nature of implementing a forced margin call via a brokerage versus a mortgage-lending bank, if it came to that. The slow resolution of a property repossession would only work if my favour the property market bounced back. My biggest risk in leveraging (at all) is that I'll end up with the "wrong" asset allocation versus my revised goals/risk profile if I postpone selling a big chunk of the asset with the CGT liability. For that reason alone, I might just end up gritting teeth and making a voluntary donation to HMRC to put myself in the best position as October 31st and associated drama unfolds (or doesn't). I get it, but my mind can't help the gut feeling that it is more risky to take a margin loan than leveraging against a house purchase. Are there figures backing up my gut feeling, or am I just conditioned by the UK property ownership obsession? Depends on your figures and what you place additional value on. For me, this works as an internationally mobile flexible offset mortgage facility and I simply cannot get this through a conventional UK bank channel. If Corbyn comes to town, I am out of here, the house is tenanted and I don't even have to make a phone call, never mind ERC, reapplication for a BTL mortgage etc, affordability checks, credit scores in new country etc...or even bother making any scheduled payments on it. Nice.
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Post by martin44 on Jul 21, 2019 19:27:05 GMT
Two rental properties here. Both have been relatively trouble-free - short void on one, none on the other. Services charges rising on one. Annualised return - 4.3%. Not much capital growth, if any. P2P annualised return - 5.7% Very similar here too , but fortunately being "Up north" the capital growth is pretty ok .. My p2p annualised will probably be a bit lower..
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hazellend
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Post by hazellend on Jul 23, 2019 8:38:32 GMT
With property partner’s recent betrayal I’m now almost fully out of property. I will probably never invest in property again.
I have a strong desire to ditch all investments apart from equities these days. My fantasy is that if I ever get some of my collateral/Lendy money back it will coincide with a 30 - 50% drop in the stock market so I can rebalance at lower prices.
Basically, I’m a very lazy person with a hard job and two kids. I don’t feel like I have the mental energy to deal with anything else these days!
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IFISAcava
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Post by IFISAcava on Jul 23, 2019 10:42:39 GMT
With property partner’s recent betrayal I’m now almost fully out of property. I will probably never invest in property again. I have a strong desire to ditch all investments apart from equities these days. My fantasy is that if I ever get some of my collateral/Lendy money back it will coincide with a 30 - 50% drop in the stock market so I can rebalance at lower prices. Basically, I’m a very lazy person with a hard job and two kids. I don’t feel like I have the mental energy to deal with anything else these days! Very sensible I feel. Especially as you are in international stocks so protected from the looming, Boris-induced Sterling crisis.
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Post by propman on Aug 19, 2019 16:42:49 GMT
On the point of source financing, I probably go the other direction, feeling more comfortable borrowing against non-property. Partly because I currently manage a low-volatility portfolio and it would be statistically unlikely to dramatically crash... I'm no expert, but that does sound horribly like the justification of LCTM. how do you distinguish historically low volatility from it being unlikely to become volatile in any realistic scenario?
being forced to sell stocks into a falling market and realise losses could be very expensive.
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sd2
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Post by sd2 on Aug 26, 2019 16:23:56 GMT
I am happy to be persuaded that borrowing money to invest on the stock market is a good thing to do. Perhaps you can do the maths for me? Let's start with what rate of interest can you borrow at to be secured against the share portfolio you intend to purchase with the lent money? I don't want to persuade you to do anything , and you certainly shouldn't follow some random bod on the internet. However as above I borrow at Libor +3%. If I do it as a spread bet (rather than a CFD) I pay neither stamp duty nor capital gains tax, thought I generally pay a wider bid offer (on both the way in and out) than LSE direct. 7,500 to £15000 2.9% some may lend more for the same interest rate Legal and general increased its profits every year (last year slight drop) for 7 years by about 10% per annum. Dividends raised well above inflation every year. Present dividend 7.41%
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bigfoot12
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Post by bigfoot12 on Aug 27, 2019 7:08:24 GMT
I don't want to persuade you to do anything , and you certainly shouldn't follow some random bod on the internet. However as above I borrow at Libor +3%. If I do it as a spread bet (rather than a CFD) I pay neither stamp duty nor capital gains tax, thought I generally pay a wider bid offer (on both the way in and out) than LSE direct. 7,500 to £15000 2.9% some may lend more for the same interest rate Legal and general increased its profits every year (last year slight drop) for 7 years by about 10% per annum. Dividends raised well above inflation every year. Present dividend 7.41% Sure, but (in my case perhaps not yours) I would have to pay tax on the 7.41 and so I am better off borrowing at ~3.7% which gets incorporated into the trade so I pay the tax on the difference (7.41 - 3.7) as a CFD. This more than makes up for the higher rate, and when available as a spread bet pay no tax. EDIT: though it seems that I should look around for better rates as IB seem to be much cheaper. (Thanks samford71.)
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