Opinion sought on investing advice given to me:-

[Pitbull]

Staalbal. Thanks. I don't mean to sound unappreciative. It's just that I asked about a specific scenario and the forum veered off into some other tangent. I have no issue with that but it's just not what I asked about.

Ok on topic:

Should you make R 200k debt and invest it in gold ?

ARE YOU FK'NG CRAZY !!!



That is the more direct answer then

 

[skuilie]

Gold is good now, but it is to late to invest in it now. You should have done that a while back before the gold price climbed so high. It should stay rather high for at least 2009... You could always buy into the the Platinum or Copper mines and hope their value recovers in the not so distant future (big risk though)

 

[DJ...]

Sounds pretty stupid to me - you're talking about a leveraged investment, so you're on the back burner from the outset, having to outperform the interest rate before you even begin to see a profit. More than just that, one doesn't invest directly in gold too much - you'd be investing in instruments that track gold and many of these instruments allow for a loss of more than your initial capital outlay.

Do not borrow to invest imo. But more than just that, when one refinances a car, they don't create an account like a bond which gives you access to your funds afaik- how were you planning to use this money to invest? Or were you merely planning to take out a loan using the car as collateral?

EDIT: I see what you're getting at - I'm having a slow day...

 

[Waaib]

Ok on topic:

Should you make R 200k debt and invest it in gold ?

ARE YOU FK'NG CRAZY !!!



That is the more direct answer then

This I understand. Thanks Pb.

 

[blunomore]

So what do you guys think he should invest in, if not gold?

 

[Waaib]

Sounds pretty stupid to me - you're talking about a leveraged investment, so you're on the back burner from the outset, having to outperform the interest rate before you even begin to see a profit. More than just that, one doesn't invest directly in gold too much - you'd be investing in instruments that track gold and many of these instruments allow for a loss of more than your initial capital outlay.

Do not borrow to invest imo. But more than just that, when one refinances a car, they don't create an account like a bond which gives you access to your funds afaik- how were you planning to use this money to invest? Or were you merely planning to take out a loan using the car as collateral?

EDIT: I see what you're getting at - I'm having a slow day...

Thanks DJ.

Refinancing a car is basically like selling it to yourself. You call up Wesbank and ask them for finance. Buy and seller is the same person. They take their admin fee and interest (over the term) and give you the cash.

 

[Waaib]

So what do you guys think he should invest in, if not gold?

Apparently property.

 

[Dolby]

Property SHARES - not property itself

 

[stoke]

Refinancing a car is not an acceptable way to raise cash, no matter what the cash is for.

Besides, when you actually try to refinance it, the financier will have a really really really hard time seeing the real value in that vehicle, seeing as vehicle sales have plummeted.

 

[DJ...]

Thanks DJ.

Refinancing a car is basically like selling it to yourself. You call up Wesbank and ask them for finance. Buy and seller is the same person. They take their admin fee and interest (over the term) and give you the cash.

Yeah I figured out what you were getting at - my slow day and all...

However, you're likely to get a better interest rate applying for a R200k loan using the car as collateral than refinancing the car imo.

But I stand by my point that this would be a crazy move. Even though leveraged finance is common practice, you have to outperform such high interest rates that you would usually invest in something solid, that you have control over, such as a business. If you wouldn't take out a loan to go gamble in Vegas then you shouldn't be prepared to do the same with the gold price imo...

 

[Waaib]

Yeah I figured out what you were getting at - my slow day and all...

However, you're likely to get a better interest rate applying for a R200k loan using the car as collateral than refinancing the car imo.

But I stand by my point that this would be a crazy move. Even though leveraged finance is common practice, you have to outperform such high interest rates that you would usually invest in something solid, that you have control over, such as a business. If you wouldn't take out a loan to go gamble in Vegas then you shouldn't be prepared to do the same with the gold price imo...

Thanks. My thoughts are the same so at least 3 and a half people here agree.

 

[Pitbull]

Apparently property.

Since you don't want to own a house for some reason. How about investing in developments instead? I went to a seminar the other day for people who build townhouse complexes and the returns are well worth it if you have the cash.

There is even some coast developments you can look into.

 

[stoke]

Here is how I see it, I am not a pro at this, but I have been watching to 3 years now as a sideline hobby.

We're going into a slight upsurge in the markets over the next 3 weeks, this is because of the bail-out package money being spent to make things look good.

However, within those 3 weeks we MUST see an uptake in "financial services industry" shares. If there is no uptake, then the bail-out money will be spent in 6 weeks, and then every teensy weensy little bit of faith in the system that still remains will fail.

But, if the financials take off, you'd better be the first one to notice.

So ... if you have to gamble, take a flying leap at a stock in the financial sector that has plunged, and try to time it right so that you get it n the upswing .. but .. only if you actually notice an upswing.

But, it's still gambling. These financial things don't sell any product that actually exists, but they do sell an emotion ... greed. The catch is .. the failure of the financial markets affects everything.

 

[stoke]

P.S. Every 4th house on the coast here is for sale.
The property section of the local paper is bigger than the paper itself.

 

[Dolby]

And my theory on property ; property guru's, let me know if I'm wrong :

You buy a R1 million propery and instantly pay R25,000.00 transfer fee's. Rates clearance, transfer fee's and other expenses can take this up to R40,000.00 down.

You then collect your R7000.00 rent monthly and at the end of the year, pay R20,000.00 income tawx - effectivly your rent is just over R5,000.00 (R63,000pa) - not even a 7% return.

5 years down the line you decide to sell for R1,500.000 and instantly pay R120,000.00 agnecy commission.

In all in all, your R1,040,000.00 property has increased R1,380,000.00 - just over 30% over the 5 year period.

Now you could put that R1 million fully into property shares and even at 9%, you'll be getting over R1,500,000.

Am I missing something?

 

[Waaib]

Now you could put that R1 million fully into property shares and even at 9%, you'll be getting over R1,500,000.

Am I missing something?

You're missing the staff at the companies in which you have the shares messing up and running the company into the ground (punny lol) resulting in you loosing all the value in your shares. ... I think.

 

[undesign]

Didn't read through everything, but don't borrow to invest (speculate). Bad principle. Full stop.

And your cost of finance will be 14% (if you're lucky) after-tax. At an assumed marginal tax rate of 35% you'll have to earn 21.5% to break even on your interest cost. With risk!

 

[DJ...]

Didn't read through everything, but don't borrow to invest (speculate).

Financing an investment isn't referred to as speculation per say. Well technically any non-risk free investment is speculation, however financing an investment is commonly referred to as a leveraged investment. Speculation is typically taking a position with the intention of taking advantage of future price fluctuations...

 

[undesign]

Financing an investment isn't referred to as speculation per say. Well technically any non-risk free investment is speculation, however financing an investment is commonly referred to as a leveraged investment. Speculation is typically taking a position with the intention of taking advantage of future price fluctuations...

Hmm...I think you misunderstood me. The typical person/friend/family member that gives you advice too buy gold has probably heard from another friend/family member or on the radio that gold is now a good investment due to a flight to investment safety, because of the world economy turmoil blah blah blah.

Meaning: taking a position with the intention of taking advantage of future price fluctuations...

 

[DJ...]

Ah right - understand what you're getting at now. Word of advice - do not take investment advice from friends, family or over the internet for that matter.

Unless you're on good terms with Warren Buffet, that is...