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Facts:
* The All Ord's Index reached a high of 6,800 in November 2007.
* The All Ord's is currently trading at 5 year lows of approximately 3,300 which is a drop of 51%.
* For information about the history of Share Bear Markets in Australia refer attached related file.
* In 2006, 41% of Australian's owned shares in one form or another
Summary of the Various Options to buy Shares:
1. Self Funding Instalments
Explanation:
Initial deposit is required and the balance is financed via a non-recourse loan secured against the shares. A new product that one financier has recently issued allows you to borrow up to 50% of the cost of eligible shares.
Advantages:
1/ Can be utilised via your Self Managed Superfund. Generally Superfund's are not allowed to borrow money but the ATO has approved this form of finance.
2/ Interest rate is tax deductible.
3/ No other security is needed
2. Margin Lending
Explanation:
Initial deposit of between 30%-50% is required and the balance is financed and secured against the shares.
Advantages:
1/ No other security needed.
2/ Select level of gearing to reflect risk appetite.
3/ Never any negative equity.
3. Line of Credit Against Home or other Property
Explanation:
Similar to a home loan except have greater flexibility for making capital repayments.
Advantages:
1/ Interest rate is lower than 1 & 2.
2/ No use of cash is required.
3/ No restrictions on what shares to buy.
4. Cash Holdings
Explanation:
Use own cash reserves.
Advanatages:-
1/ No interest payable
2/ No restrictions on what shares to buy.
5. Protected Loans
Explanation:
Lender provides 100% of the invesment amount
Advantages:
1. Can make larger investments
2. Never any negative equity
3. Can lock in fixed terms of up to 5 years
At Beans Financial Solutions we have the right professionals who can assist you further if you would like to utilise one of these financing options or would like further information to assist you.
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