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  • Profile photo of bamutebamute
    Participant
    @bamute
    Join Date: 2003
    Post Count: 9

    I will have to disagree with you there noddies on a number of issues:

    I enjoy the interesting and useful material but I am appalled by the implications of what I am encountering in the course.
    This only proves that little and incomplete knowledge is dangerous.

    He then continues to show his ignorance of what and how a managed fund works,and discusses the fees and charges associated with funds, somehow coming up with this statement.

    This is an introduction to the article giving an outline on what it will be about. This doesn’t prove anything, that’s what the rest of the article is for. I’m not sure of your reasoning behind ‘This only proves that little and incomplete knowledge is dangerous’.

    There is no discussion of the trade-off between diversification and fees and charges. The more you diversify, the more you pay.
    So he is saying that if you have 100% of your asetts in one fund you will pay less in fees than if you have 50 % of your assets equally in two funds.
    This is wrong as you pay the same amount in fees for both cases as it is calculated on the total invested,which remains the same (basic arithmetic).

    You are using basic arithmetic, but you have misinterpreted the paragraph. You are comparing one fund vs two funds. The article is comparing direct shares vs managed funds. The sentence before says: ‘If a client owns shares directly he or she should sell them to invest into a diversified fund’

    You pay the least when you own shares directly. You pay substantially more when you own an index fund.

    The idea behind a managed fund is to pay for the expertise and services of the fund managers to increase your return at a lower risk( if you do not have the time or the skills to do so yourself)
    Factually 75% of DIY day traders lose their money within 3 years.

    This article does not mention day trading. It is talking about ownership of direct shares. Once again you are bending the article and comparing apples with oranges. The article states:
    ‘You pay the least when you own shares directly. You pay substantially more when you own an index fund. You pay a third of your assets every 20 years when you own an active fund, assuming 2 per cent a year in fees. If you include tax, you lose another 1 percentage point a year at least. Now you are down to 54 per cent – you have lost 46 per cent to a convenient ideal.’
    I agree that you are paying for the expertise of a fund manager when you invest in managed funds. But with the amount of asset value you lose in fees, you had better have a very good fund manager to make up the shortfall!

    Profile photo of bamutebamute
    Participant
    @bamute
    Join Date: 2003
    Post Count: 9

    Hello again, one other much delayed question. I realise you can claim lenders mortgage insurance back over 5 years on an IP. If you purchase a house as a PPOR using LMI and then change it to an IP after 6 months can you claim the LMI? Cheers all.

    Profile photo of bamutebamute
    Participant
    @bamute
    Join Date: 2003
    Post Count: 9

    If you change your ppor into an ip after 12 months can you claim the stamp duty as you would if the house was bought as an ip?

    Profile photo of bamutebamute
    Participant
    @bamute
    Join Date: 2003
    Post Count: 9

    Sounds good. I don’t mind being in the house for a year and then renting it out. As long as there are no hidden costs:-)

    Profile photo of bamutebamute
    Participant
    @bamute
    Join Date: 2003
    Post Count: 9

    Thanks for the help people. Having separate loans will work well as I can pay off my non-tax deductible loan first.

    Profile photo of bamutebamute
    Participant
    @bamute
    Join Date: 2003
    Post Count: 9

    So I couldn’t just withdraw the money out of my current home loan?

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