Leverage on S-Reits to boost ROC???

Hmm .. interesting!

Is there something with Maths below?

Powerful ROC from leveraging?

For example; if one has $110K capital to invest.


Without margin account:

One can fully invest $110K for e.g. 7% dividend yield

Leverage on margin account :

1. One can invest $100K for e.g. 7% dividend yield.

2. Leverage $40K on margin account at net 3.5% dividend yield after offsetting 3.5% interests payable to broker.

3. $10K as cash reserve to top up margin call when necessary

Does leveraging on margin account to improve yield on own capital look fantastic?

Really?

Or something wrong with the Maths?

OPM : Other People's Money

Leverage (using OPM) through borrowing or margin is fun as you may achieve higher ROC on your own capital invested after  deducting the cost of leverages. But; leverage is also known as double edged sword! 

Another way of using OPM and feeling shiok and without the threat of double edged sword is ....

Read? Free Shares From ComfortDelGro

Take back your own invested capital and let the profits or OPM from the market continue to run and collect dividends.

Shiok man!

When your account size gets larger; lagi lagi shiok or sibei shiok as it is OPM in the market! 

How to scare of market volatility?

That is passive income! 

No capital at risk! 

Ho ho!

Our brokers are watching us and will be very scared when market crashes

Read? Contra Trading. Damn Shiok!!! (2) - Refresh


hyom hyom

9:52 AM (8 minutes ago)

to me 

hyom hyom has left a new comment on the post "How you know you no longer Bei Kambing?": 

Hi Jared,

If a person is a bei kambing and knows he is a bei kambing in certain products, that is enlightenment. In trading/investing, that is a big time saver and money saver. 

To be honest, I do not have the balls to trade bitcoin. It can fall 20% within a day. Imagine someone trading leveraged bitcoin futures last week. Futures keep halting due to limit-down. Even popular bitcoin exchanges like coinbase halted trading due to massive panic selling. The wait to get out will be a torture. Don't say only I scared. I think even the broker will be scared.


Uncle8888 is not into contra trading anymore. Chop fingers liao!

One morning when market seriously gap down; his broker called him in the morning to remind him of his outstanding positions to pay up or close by 5 PM or he would force SELL the next morning when market opened.

His broker called him again at 4 pm to repeat reminder!

If your brokers are not scare or worry; it may mean your positions are not large enough! Fact of life as traders!

UN-Inspiring Story in Personal Finance and Investment: Becoming a Millionaire at age of 50!!!

UN-Inspiring Story in Personal Finance and Investment: Becoming a Millionaire at age of 50!!!


Too old?

Why more corporations selling bonds or perpetual securities???

Just for Thinking ....

Read? Insurance, Leverage, and Peace of mind.

May be the banks are thinking that these corporations are too risky to lend them more money. The corporations have no better choice but to borrow money from the stock market through bonds or perpetual  securities by offering "attractive" interest payment to lenders in the current ultra low interest rate environment. It is damn "attractive".

Banks are not lending more money directly to these corporations. But I heard some "clever" retail investors were borrowing directly from the banks and then lent their borrowed money to these corporations by leveraging on the bank loans to buy these bonds or perpetual securities to earn the differences by taking on the risks which are deemed too high by the bankers.

The bankers are in the business of lending and they are not doing it. Are you thinking it loud?