investing now?? advice

Recently I had my first meeting with a Financial adisor.
What he advised me is that I can use the equity in my investment house (I have one house I live in and one investment house with equity of about $140,000) to purchase shares via a managed fund.

Just wondering what the opinion of anyone in here who plays the market is?

Is it a good time to jump in??....Is getting a loan based on the equity in my investment house to buy shares via a managed fund a good idea??

My personal worry is that the worlds oil supply is limited...yet the demand for it can only grow....so oil prices skyrocket, meaning cost of living skyrockets, meaning most company profits dimish, meaning the stockmarket possibly crashes. Am I wrong on this??
Then again after the mini crash we've had the market seems to be on the way back, so maybe jumping in now and holding for 5-10 yrs is a good thing.

Considering interest rates on a loan, management fees etc is using equity for a loan at the moment a good idea to get into a managed fund. Im a newbie at this so as much advice as possible is greatly appreciated.
Cheers

Rosewaterwrx

Anything is possible.
Stockmarkets can crash, and or housing markets can fall.

The encouranging news is that we have shortage of housing
and we have low unemployment so as long as we have a job
we should be ok.

I wouldn't touch the equity because I don't believe that now
is the right time to take risks.

World financial markets are not well and oil and food prices are rising.
These are very worrying factors.

IMHO it's best to concentrate on paying down our loans
because more difficult days could be coming.

Here is some reading.

Can Asian Money contribute to inflation, world food & petrol prices?

Hi RoseWaterWRX,

If this is what you believe, you could potentially buy oil stocks, if you wanted.
From October last year, the market came down about 20% or so (I'm sure someone on the forum knows exactly how much) and it is already up about 12% or 13%.

Cheers,

Dan

PS This is general information, speak to your FPA registered Financial Planner before making an investment decision.

Very interesting thanks for the advice.

My basic idea was to use perhaps 60% of the equity to buy into a scheme called GP100.

This is basically a managed investment scheme that purchases the top 200 australian companies. This scheme lasts for 5 years and within this agreement Credit Suisse has a guarantee at the end of the 5 yrs to provide $1 for every $1 invested....a protection against a falling market if need be.

Im aware that $1 in 5 yrs doesnt equate to $1 now, but then again the dividends in the meantime should help compensate if for whatever reason the market in 5 yrs is devalued.

Im very new to investing but personally sounds like a good deal to me???

If your time frame truly is 5-10 years, and you can manage the cash flow (i.e. you can afford the interest repayments on the borrowed equity over that time), then borrowing against your IP to invest in shares (directly or via managed funds) is a perfectly valid strategy. And history suggests you should reasonably expect returns above and beyond the interest costs over that sort of time frame.

I used IP equity to invest in a selection of managed funds (mostly Australian, but some China and US exposure) in February this year, and over the last 3 months, have already seen > 9% growth. I've also dabbled in direct shares over this same time period, and have realised > 30% gains.

There are always going to be "what if's" to use as a personal excuse not to invest at a particular point in time, just as there are always going to be risks with investing of any kind. However, there are also ways to manage those risks, and a sound strategy can still generate good results in seemingly difficult times.

I, personally, am in a much better position today, having invested recently, than I would have been if I had sat on the sidelines the past quarter. But even if I was worse off today, I know that I can manage my cash flow to hold on to my investments for the long term, where I am more likely than not to be better off.

JustB

I would be interested in knowing if anyone on the forum has borrowed against their PPOR to invest in managed funds. Personally, I don't have a PPOR but will probably shift into a IP next year. I will place funds into the offset account against the property. Having an unencumbered property with all that equity might be too much of a temptation for me. All that equity and no where to go. Navra is looking good.

LS

LS
Tempting isn't?
My conservative side says I should take it easy
while my other half is telling me to invest it in oil and resource stocks
but the truth is, I am too scared to touch it...

Yeah, I am a bit hesitant too. My accountant doesn't like it either. It's a good way to lower the LVR on the ML. I don't think I will be able to help myself. Are you out there Steve? I think I know the answer

LS

sorry for the stupid question...PPOR does that mean property for purpose of renting?? in which case im in the same boat.

What do I utilise the equity for?
Seems a shame to just have it sitting there rather than use it.
Im only beginning investment wise but the more time you have available funds sitting around rather than compounding and accumulating the less you can achieve......then again, dont want to make any silly mistakes at a bad time.

Try the glossary: PPOR