Funds Focus

Many pundits are tipping double digit returns for Australian equities in 2011. We consider ways in which you can take advantage of a rising market through the use of leverage.
Gearing (borrowing to invest)
If you think the markets are going to bounce back this year, then borrowing to invest is almost certainly going to give you the best returns. There are now a number of different ways to do this, from margin lending, structured products, self funded instalment warrants and internally geared

“Give me a lever long enough and I could move the world“ – Archimedes

I am sure the Global Financial Crisis is not quite the context which Archimedes had in mind when he made this statement. Too much easy money has flooded our financial system leading to global repercussions.

Unfortunately this easy money led to investors taking on too much leverage and investing in assets which have not stood the test of time (Babcock and Brown et al). Lending practices of Opes Prime and

How to minimise the risk of margin calls
Margin calls are a safety feature that lenders have added to their loans to ensure that the amount you owe doesn’t end up exceeding your portfolio value. ie it’s an early warning sign that you should reassess your portfolio to reduce your exposure and reassess your portfolio. Lenders aren’t closed to suggestions here, they just want to see your borrowing to fall below X% of the total value, if your able to add more cash, shares or managed funds