# Geared managed funds



## shady (21 November 2010)

Am I correct in understanding that you are able to have up to a 65%/70% LVR on the CFS geared aussie share fund? So in effect you can gear into a geared fund?


----------



## poverty (1 December 2010)

shady said:


> Am I correct in understanding that you are able to have up to a 65%/70% LVR on the CFS geared aussie share fund? So in effect you can gear into a geared fund?




Double gearing.  Even better borrow the money to buy into it for some triple-gearing!


----------



## Julia (1 December 2010)

poverty said:


> Double gearing.  Even better borrow the money to buy into it for some triple-gearing!



Are you serious with this suggestion?


----------



## robusta (1 December 2010)

shady said:


> Am I correct in understanding that you are able to have up to a 65%/70% LVR on the CFS geared aussie share fund? So in effect you can gear into a geared fund?




Wow not only are these investors????at the mercy of some fund manager they gear it to increase risk???????????
Wonder if we can interest them on any other ponzi schemes?


----------



## poverty (2 December 2010)

robusta said:


> Wow not only are these investors????at the mercy of some fund manager they gear it to increase risk???????????




Everyone's situation is different I think.  If you have half a million dollars, you probably don't want a lot of risk and you want to protect your capital.  If you have $3000 to invest and can probably afford to chip in an extra ~500 a month 
'risk' is exactly what you should be looking for, as you have no money to speak of anyway, you're only risking a paltry amount but the upside over time can be huge if you get the right market conditions.


----------



## Monario (2 December 2010)

poverty said:


> Everyone's situation is different I think.  If you have half a million dollars, you probably don't want a lot of risk and you want to protect your capital.  If you have $3000 to invest and can probably afford to chip in an extra ~500 a month
> 'risk' is exactly what you should be looking for, as you have no money to speak of anyway, you're only risking a paltry amount but the upside over time can be huge if you get the right market conditions.




your real name would not happen to be Emmanuel Cassimatis would it?

Perhaps you should jump over to the storm financial thread and read it from start to finish, without fail. Maybe then you will understand why this is bad!!!


----------



## YELNATS (2 December 2010)

Monario said:


> your real name would not happen to be Emmanuel Cassimatis would it?
> 
> Perhaps you should jump over to the storm financial thread and read it from start to finish, without fail. Maybe then you will understand why this is bad!!!




Slightly over the top. There's a bit of a difference in risking $3,000 versus your life savings or your humble abode when you're already in retirement as in the Storm saga.


----------



## poverty (2 December 2010)

Monario said:


> your real name would not happen to be Emmanuel Cassimatis would it?
> 
> Perhaps you should jump over to the storm financial thread and read it from start to finish, without fail. Maybe then you will understand why this is bad!!!




If you're bullish on the ASX it's not bad at all, gearing will multiply your earnings in the good times, just like it multiplies your losses in the bad times.  I personally think that on the back of resources boom Mk2 the ASX will do well over the next 5-10 years and i'm going to put some spare moneys from my budget on the line and use a lot of leverage to try and make a chunk of money from almost nothing.  Unit prices of these geared funds absolutely tanked during the GFC, just think about what they will do on the way back up (that's what I'm doing anyhow).

I don't think it's a crazy thing to do, some people spend a deposit and then $500 a month on a car loan and the car will be almost worthless by the time they pay it off.


----------



## skc (2 December 2010)

Remember with the geared fund, it is internally geared and you won' be subjected to margin call.

But if you gear into a geared fund, you will be margin called when the time is right/wrong.

And if you gear into a loan to gear into a geared fund... good luck.

If you like to play with money you don't have - personally I would save the trouble with all these loans and just long a CFD index instead. Much better leverage, probably lower costs and definitely get margin called faster.


----------



## Monario (2 December 2010)

poverty said:


> If you're bullish on the ASX it's not bad at all, gearing will multiply your earnings in the good times, just like it multiplies your losses in the bad times.  I personally think that on the back of resources boom Mk2 the ASX will do well over the next 5-10 years and i'm going to put some spare moneys from my budget on the line and use a lot of leverage to try and make a chunk of money from almost nothing.  Unit prices of these geared funds absolutely tanked during the GFC, just think about what they will do on the way back up (that's what I'm doing anyhow).
> 
> I don't think it's a crazy thing to do, some people spend a deposit and then $500 a month on a car loan and the car will be almost worthless by the time they pay it off.




Be carful is all I am saying and understand the pitfalls, what you want to do is NOT safe imho due to the gearing nature you intend.

Questions I would ask.

1) What is my goal, So you start with 3k, and you double gear with 3K, how big do you let it get 30k, 300k, 3million? 3k might sound like peanuts if it goes bad, how does 30K sound?

2) What is the point I will pull my investment if the market heads south 5% drop 10% drop?

3) Just how quick can you pull out, this was a big problem with storm, often taking double digit hits from the tiime of request to sell to the time it is actually sold.

4) Do I have the ability to make the call and pull the funds? A lot of people thought it was a good opportunity to invest, afterall the market is down, why would'ny you?

Gearing is a great way to grow an investment if used wisley and at very low levels, Heavily gearing is a very unstable way to grow and investment and a quick way to lose a lot of money if things tank.

If you have this extra cash and time on your side why not start a regular gearing plan, $500 a month, 35-40% geared and watch that grow, pllay it safe is my motto.


----------



## poverty (2 December 2010)

Monario said:


> Be carful is all I am saying and understand the pitfalls, what you want to do is NOT safe imho due to the gearing nature you intend.




This is fine, if i wanted my investment to be safe i would put it in a term deposit.  I don't want it to be safe, I want to risk some money I can afford to lose to potentially make a lot more.



> 1) What is my goal, So you start with 3k, and you double gear with 3K, how big do you let it get 30k, 300k, 3million? 3k might sound like peanuts if it goes bad, how does 30K sound?




30K sounds like my gearing has been going very well, going to be quite a few years before i have to think about that 



> 2) What is the point I will pull my investment if the market heads south 5% drop 10% drop?




This depends on how bullish I feel I guess, if I came to believe that markets would never recover and are in terminal decline I would of course sell.  Otherwise so long as there is money on hand to invest monthly it shouldn't matter if there are temporary declines, the monthly investment can always be used to bring the loan back into balance rather than leverage up even more.



> 3) Just how quick can you pull out, this was a big problem with storm, often taking double digit hits from the tiime of request to sell to the time it is actually sold.




I'm not investing with storm or any other financial adviser scammers.  I'm not being duped by anyone, this is my own choice.  Storm didn't like to sell because they were scumbags who valued their own management fees over their clients welfare.



> 4) Do I have the ability to make the call and pull the funds? A lot of people thought it was a good opportunity to invest, afterall the market is down, why would'ny you?




Make the call and pull the funds when?  If you're pulling them at the top, well done sir.  If you're pulling them at the bottom you've screwed yourself and yes that was a good opportunity to invest I would say.


----------



## Monario (2 December 2010)

poverty said:


> I'm not investing with storm or any other financial adviser scammers.  I'm not being duped by anyone, this is my own choice.  Storm didn't like to sell because they were scumbags who valued their own management fees over their clients welfare.
> 
> .




If your putting your money into a geared fund, I am assuming it is going to be managed by a third party, storm did have some issues yes, but even dealing direct with the likes of MLC and Challenger had its hold ups...

Sounds like you have your mind made up anyway, hope it all works out, come back and tell us how well it all went in 3years please...


----------



## poverty (4 December 2010)

Monario said:


> Sounds like you have your mind made up anyway, hope it all works out, come back and tell us how well it all went in 3years please...




Been looking into how to pull the trigger on this and looking at the fee structures involved and all the paperwork involved just to get it going thru my commsec margin loan.  I'm actually starting to think it'll be easier just to buy a big chunk of STW with the margin loan and track the index, which will save a lot on fees and much easier to buy and sell. :/


----------

