RaboPlus and margin loan

Hi,

I am going to invest with RaboPlus - I'm quite new to this and don't have much to invest, and feel RaboPlus is pretty good in terms of fees/minimal investment amounts for the first run. But I do plan to get Margin Loan, not too much (50-50 or 60 eq - 40 loan) - I have enough fixed interest/regular income to repay it in case of margin call.

The question however is whether anyone had any experience establishing margin loan with managed funds in RaboPlus. There is no builtin facility for margin loan at RaboPlus. And so far from my talks to margin loan providers I wasn't very successful at getting it, mostly because they don't seem to know much about it, and also because with RaboPlus I don't own the units in funds - just a share of units. Does it make any difference or they are just lazy/cautious due to my lack of experience?

I would also appreciate any advice on getting first margin loan or going with RaboPlus.

Thanks.

Denis

there is a reason why Rabo is cheap.. limited choice.. you can't get a margin facilify via Rabo.

thanks for the reply, crc_error.

I still wonder, if there is no margin loan via Rabo, perhaps there is one outside.

I talked with St. George this week, and they seemed to have a belief that there is no problem. They asked for more information - such as amount, and allocations across funds, though they left me feeling as if they will eventually try to sell me one of their investment platforms rather than offering margin loan...

I haven't received the reply yet so it is still unclear.

I am wondering if there are alternative loans with a similar rate - say, a secured personal loan or something like that. Anyone knows if they can be suitable for investment and if there are offers that can beat margin loan in interest rate?

Thanks.

Denis

Hi Denis,

If you know exactly how much you want to invest and what in, this is called execution only as no advice is given. Hence, why the person you were speaking to was trying to find out whether it is execution only or if they are giving you advice.

A St George planner will still try to help you out with other needs (an obvious thing to make sure a client is covered for Income Protection if they ask for a Margin Loan if something happens do you want to be forced to sell your investments?).

Sometimes it isn't quite cleancut whether it's execution only or not.

With a SGB Margin Loan through a SGB FP you will receive a 0.2% discount off the promotional rates on Margin Lending Interest rates

As at 30th August 2008, the Variable rate for a loan under $250k is 10.70%, if you take it fixed for 4 years it's 9.85%!!! Less the SGB FP discount to 10.50 or 9.65% respectively. A Secured Loan on a variable rate is 11.45% or 10.99% for 1 to 5 years fixed. Interest Rates - St.George Bank

The RaboPlus managed fund list is interesting as it includes Perpetual WealthFocus Investment platform which is a fund platform.

Private Message me if you don't get an answer.

Cheers,

Dan

PS Yes I am employed by the St George Group as a Financial Planner. Before making an investment decision speak to your FPA Financial Planner.

problem with fixing margin loan rates, is you have to pay in advance, the whole interest amount up to 12 months, then annually. Can be a bid much if you have a big loan! If you have so much cash lying around, then why bother with a loan anyway..

Margin lending is becoming very uncompetitive, and the industry needs to release lower late products.