Margin Loan on Navra units

Hi folks,
I want to do a few sums on the value of a margin loan for getting some more NAVRA units. I already have a few for which I paid cash.

Is there a table/ spreadsheet or similar that can show me for example % gains on say %100k worth of units, then the same on $150k worth ; if I margin borrow for the extra 50k.
I just want percentages really. I will try to find my crystal ball to decide the merits of going ahead.
Anyone know of a rule of thumb perhaps??

Hi Giddo,

This is just a pretty basic spreadsheet so you can quickly see the outcome of different scenarios. Have a play around with the rate of return from the fund, and also the interest rate of the margin loan, to see if it is still viable in more bearish situations. Basically, the level of gearing will magnify any gains or losses.

Best wishes, Chris

Attached Files

Geared ML.xls (16.5 KB, 135 views)

Very good Chris. Thanks a million, just what I wanted.
Giddo

Or you could try this one..

Attached Files

Toms Super Duper Fund Margin Analysis.xls (54.5 KB, 190 views)

Thats much prettier than mine, maybe I should have coloured some cells!

Ok stupid question but I'll ask. From the spreadsheet (and other reading) I've always been under the impression that the LVR was calculated using the total portfolio value (ie if I have 100 ANZ shares, and purchase another 100 ANZ shares with my loan, I'm at 50%, as the loan is 50% of the folio).

I now seen online that if I have $50,000 of existing shares and my LVR is 70% then I can only purchase an extra $34,000 shares to add to my folio, which would be the MAX, leaving no safety margin, so if I want 50% I can only buy $25,000 of shares with the margin loan.

Is there a difference from starting from scratch vs using an existing portfolio, or am I just missing something simple in this?

Thanks for that help.

I think you missed adding in the value of the shares you are buying.

Say you had 50K of existing shares and the margin amount was 70% you could take 35k in cash and max out your LVR or by buying shares at 70%, you could buy 50k worth and have a LVR of 50% and a buffer between 25% and 30% depending on which loan you use.

Ahhh, cool, so it's one of those things that would turn up, after I've done it. Thanks.