Margin Lending - the good, bad and the ugly.

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Margin loans are simply an investment loan that is secured against the assets you are purchasing, such as shares and managed funds.   You don’t need to sign over your house and that is why so many people like them.    However, investors can get into trouble if their investment falls below a certain level, known as the loan to valuation ratio (LVR).

You may have heard of margin calls.   When these happen, investors are in a bind.  They can either sell down their investment to restore the LVR,  in other words forced to crystalize losses, or have to find the funds to top it up.  What a tough decision to make in this current economic climate.  You could be buying bargains, or perhaps throwing good money after bad.    Some institutions also allow you to assign other assets.  Read more

I have $100K after selling my house. Should I buy another house or invest the money?

Q. I am 40 years old with 1 child in college 16 yrs old. I have $100,000 after selling my house. I work 4 days per week and earn 616.00 gross should I buy back into the market or am I better of to invest my money and rent.

Josie’s answer: Good question and would love to have a crystal ball. There is so much talk that the property will stagnate in the next year or two, and of course it depends on where you plan to buy (some areas seem to be doing OK).

From a purely numbers perspective, there is plenty of research to suggest people are better off renting than buying, but only if they invest the difference.

Most of us don’t have the discipline to do this.

From my perspective, I prefer to be a home owner as it gives me a sense of security. I hate the idea of a landlord telling me what I can or can’t do, Read more