My opinion only - DYOR etc etc etcThere is some irony in reading...

My opinion only - DYOR etc etc etc


There is some irony in reading all the advice saying 'dont invest now' from so many contributors. It is a great example of the fear instilled by the bear market fear.

Yet 18 months ago, so many were saying 'invest invest invest".

Ironically this period is a GREAT time to be building up a long term portfolio (with a 2-5 year horizon). However you MUST be able to wear the volatility in the short term (ie make sure that you know what you will be doing in various 'worst case scenarios') - You should be spending most of your time thinking about what you would do if it goes sour - not how you will be spending any gains.


(I speak as as investor / trader / option seller since 1993 - someone who sold 70% of their portfolio last september and am now buying back beaten blue chip shares on fantastic yields). I am still wise enough to recognise that I need a day job!

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For you, a margin loan would seem to be the cheapest most versatile way of entering the market.

BUT!!!!

You must not leverage yourself such that you will be receiving margin calls in the short term from the extreme volatility that we are seeing (ie 10% daily movements in blue chip shares). You also need a medium to long term view (2-5 years) and the financial means & ability to ignore losses in the short term without financially crippling yourself.

(Ideally you need a loan with a reasonable interest rate that is secured against a capital stable investment that will not suffer a margin call)

Obviously property is good for this if you have it.

A personal loan will incur a large interest rate penalty (which will be deductable if you structure things appropriately) - but this high cost will mean you need a correspondingly high return to make the investment worthwhile.

You also should be careful about using a vehicle as security - what happens if the vehicle should loose value (and isn't recoverable under insurance - eg mechanical fault).


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If you have the earnings to protect yourself against a loss in the market (ie you can afford to loose money) then a small personal loan is a great learning tool for entering the market (I did a similar thing in 1993 when I began investing. However, as mentioned above, it is not a great means of making money (because of the high rate penalties).

J.


Good luck with whatever you do

Just make ssure that you aren't digging yourself into a financial hole in the pursuit of short term gains.

Get some good avice from somewhere - (even if yuo pay for it) - You will be risking much more money than what such advice will cost you.

J.