tag:blogger.com,1999:blog-37872616.post4197026613925720126..comments2024-03-29T12:20:03.199+08:00Comments on BULLy the BEAR: Leveraging for passive incomela papillionhttp://www.blogger.com/profile/01372278083694506953noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-37872616.post-78306569543068737392021-07-01T22:01:30.397+08:002021-07-01T22:01:30.397+08:00It's a great blog about finance thanks for sha...It's a great blog about finance thanks for sharing the blog to know more about online banking..<br /><a href="https://play.google.com/store/apps/details?id=com.msf.kbank.mobile" rel="nofollow">Create Bank Account Online</a><br />hiren patilhttps://www.blogger.com/profile/00368712317514983817noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-55062848369016211382011-04-25T11:43:04.264+08:002011-04-25T11:43:04.264+08:00Hi AK,
Yup, I know your stance. We all have diffe...Hi AK,<br /><br />Yup, I know your stance. We all have different attitudes towards borrowing and this primarily stems from our attitudes and values towards money. No right or wrong about it.<br /><br />If someone leveraged greatly and he makes good money, he's smart. If someone leverage greatly and he loses much, he's stupid. I guess the end determines the validity of the method.<br /><br /><br />Hi so1trg,<br /><br />It's arbitrage, yes, but on the same currency. For LTCM, they are doing well doing non-market direction trades until they started messing around with options with a bias in market direction. But that's immaterial, I suppose, and I fully understand your concerns regarding the risk involved in leveraging too much.<br /><br />As mentioned a zillion times, this is not for everyone. I'm just sharing the strategy in essence and not in detail, to show that people had done this and it's possible. Whether an individual wants to do it is not for me to comment on.la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-53193888227262021572011-04-25T11:36:08.153+08:002011-04-25T11:36:08.153+08:00Hi bro8888,
I don't know. I'm not ready f...Hi bro8888,<br /><br />I don't know. I'm not ready for this kind of strategy at present, so there's no point thinking too much on the details now. I'm just keeping an open mind on it.<br /><br />Hi anonymous,<br /><br />Thanks for sharing...wow, 250k to see meat...I think it's certainly not for everyone, haha!la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-17495173870426105252011-04-25T11:01:01.567+08:002011-04-25T11:01:01.567+08:00The method suggested sounds suspiciously like arbi...The method suggested sounds suspiciously like arbitrage.<br />Agree with other readers that this is like picking pennies in front of a steamroller.<br />When the unwinding occurs as it happened multiple times in history (LTCM, Subprime), the high leveragers would need plenty of liquidity to keep afloat (Merril Lynch, even GS was not spared).so1trgnoreply@blogger.comtag:blogger.com,1999:blog-37872616.post-17901830261401072912011-04-24T23:17:24.710+08:002011-04-24T23:17:24.710+08:00Hi LP,
Although I am personally uncomfortable wit...Hi LP,<br /><br />Although I am personally uncomfortable with leveraging, preferring to be debt free, I am not averse to leveraging if an opportunity to make a lot of money comes along and I do not have enough money to take advantage of it. :)<br /><br />I would try to repay all my debts on time and in the shortest time possible although I understand the concept of good debt. It's just a personal choice and that is all there is to it.AK71https://www.blogger.com/profile/16832145412062954289noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-91501097214946996302011-04-23T23:02:46.447+08:002011-04-23T23:02:46.447+08:00LP,
I have been doing what u had mentioned for e p...LP,<br />I have been doing what u had mentioned for e past 2 years. U may collerate ur rated bonds to banks, but they must be above investment grade. This term is called RR. <br />Basically u buy 2 lots, 1 lot with borrowed fund. If e bond yields 4.7% n e bank charge u 1.8%, u effect earn e spread or 2.9% which is not bad. <br />However you need to invest 250k to see e "meat"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-37872616.post-4323716583834096502011-04-23T21:23:02.809+08:002011-04-23T21:23:02.809+08:00Hi Brolp,
To buy $1M property as investment, you ...Hi Brolp,<br /><br />To buy $1M property as investment, you need to leverage. There is no doublt about it.<br /><br />To buy X or XX lots of SingPost, SPH, or Perps for passive income, do you really need to leverage?<br /><br />Are you thinking of buying XXX or XXXX lots of SPH, or Perps for leveraging as passive income, when you are ready to do it next time?Createwealth8888https://www.blogger.com/profile/08563834016250153049noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-75407884193079657132011-04-23T20:21:50.990+08:002011-04-23T20:21:50.990+08:00Hi financialray,
I think leveraging is just borro...Hi financialray,<br /><br />I think leveraging is just borrowing what you don't have (money) to get something that you want. Anyway, the definition is not the main issue here, I suppose. I'm just sharing the strategy, whether it's good for one or not depends on how comfortable you are on this. Risky or not depends on how well you can mitigate the risks, I suppose.la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-13105601978791685002011-04-23T20:18:38.925+08:002011-04-23T20:18:38.925+08:00Hi temperament,
You're right, banks lend you ...Hi temperament,<br /><br />You're right, banks lend you at a favourable rate if you are qualified to do so. If not, the interest rate would not be low long enough to make use of this strategy.<br /><br />Clearly it's not for everyone.la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-81818541656471611732011-04-23T13:54:50.641+08:002011-04-23T13:54:50.641+08:00Hi LP
Think purchase of car and furniture cannot ...Hi LP<br /><br />Think purchase of car and furniture cannot be considered leveraging. Paying for wedding and reno loans probably not too. If intention is to keep property long term and cash flow is not a problem, leveraging with Bank's money is the only wise way to go in my opinion. Borrowing from banks to play with stocks is really trying out a double edge sword. My advice for playing with stocks is to use spare cash as far as possible. Otherwise run the risk of being caught naked when the tide turns low.financialraynoreply@blogger.comtag:blogger.com,1999:blog-37872616.post-37064856810368163132011-04-23T11:37:50.881+08:002011-04-23T11:37:50.881+08:00Hi
In Singapore, I think banks are allowed to lend...Hi<br />In Singapore, I think banks are allowed to lend you money only if you are "qualified" one way on another. If not everyone also want to use leverage to get rich. Try to borrow from 'Macky", no question ask.<br />I only wish our banks invented "CDO" rather than the American's. But this kind of products or variations of this will appear again.Watch out for it and see whether you can prosper from it or become the victim or escape? <br />Ha! Ha!<br />Some people will always think of the shortest way to get rich legally or otherwise.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-37872616.post-75813742161664247822011-04-23T00:15:17.951+08:002011-04-23T00:15:17.951+08:00Hi bro8888,
I'm not doing this, so if your &#...Hi bro8888,<br /><br />I'm not doing this, so if your 'you' is directed at me, then my answer is I don't know. <br /><br />Hi finanialray,<br /><br />Banks can lend money to me when I:<br /><br />a) purchase a property for stay<br />b) purchase a car<br />c) purchase furniture<br />d) purchase stocks<br />e) do up my reno<br />f) pay for wedding<br />g) pay for education<br /><br />Oh, you get my point. To put 'only' in your comment seems too absolute, isn't it? <br /><br />There are financial institutions that do lend you money for buying the financial instruments I've mentioned.la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-86824365451923821702011-04-22T10:54:36.926+08:002011-04-22T10:54:36.926+08:00Banks will only lend you money when you want to pu...Banks will only lend you money when you want to purchase a property for investment.financialraynoreply@blogger.comtag:blogger.com,1999:blog-37872616.post-44379179799417098172011-04-22T09:20:18.816+08:002011-04-22T09:20:18.816+08:00Hi Brolp,
If the idea sounds good.
Do you still ...Hi Brolp,<br /><br />If the idea sounds good.<br /><br />Do you still have SPARE OR SURPLUS CASH sitting in your banks earning at low interest rate and that is you are currently not 100% invested yet.<br /><br />If yes, will you dump it all into your new found idea to earn passive income and stay 100% invested.Createwealth8888https://www.blogger.com/profile/08563834016250153049noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-52748959626179132182011-04-22T09:20:02.685+08:002011-04-22T09:20:02.685+08:00Hi Brolp,
If the idea sounds good.
Do you still ...Hi Brolp,<br /><br />If the idea sounds good.<br /><br />Do you still have SPARE OR SURPLUS CASH sitting in your banks earning at low interest rate and that is you are currently not 100% invested yet.<br /><br />If yes, will you dump it all into your new found idea to earn passive income and stay 100% invested.Createwealth8888https://www.blogger.com/profile/08563834016250153049noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-33421699437054029652011-04-22T07:51:36.617+08:002011-04-22T07:51:36.617+08:00Hi Toh Wee,
Oh, I didn't call it passive inve...Hi Toh Wee,<br /><br />Oh, I didn't call it passive investing. It's passive income, which means that the stream of income comes in without you being there physically. Passive doesn't mean that it comes without work, because if that's the case, nothing is really passive income, haha :)<br /><br />Thanks for giving a broader perspective. I'm just a conduit sharing what I've learn from newbie. I think if you have 1 mil and you leveraging on 100k, it's alright. I didn't mention in the post, but we have to leverage based on our personal balance sheet. It's suicidal to borrow 100k if you only have 20k in your bank account, unless you can truly control the risk.<br /><br />I like the phrase "picking pennies in front of a steamroller" :)la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-45384917934493615772011-04-22T07:46:30.721+08:002011-04-22T07:46:30.721+08:00Hi bro8888,
The point of leveraging is to use wha...Hi bro8888,<br /><br />The point of leveraging is to use what you do not have to get what you want. It's not for everyone, and not everyone wants to do it, I guess.la papillionhttps://www.blogger.com/profile/01372278083694506953noreply@blogger.comtag:blogger.com,1999:blog-37872616.post-71041444435078301152011-04-22T06:17:50.508+08:002011-04-22T06:17:50.508+08:00Hi LP,
Thank you for sharing. I like the strategy...Hi LP,<br /><br />Thank you for sharing. I like the strategy. However, I have an issue with labeling the strategy as passive investing. It is risky and definitely not recommendable for retirees and widows with young children!<br /><br />Banks, traditionally, borrow short term at a very low interest rate and lend long term at a much higher rate. It is generally safe because the banks borrow from many small depositors, and lend out to many other legitimate businesses. That’s diversification.<br /><br />The problem for the average investor is that he borrows on short term. He is betting on 1 thing. Interest rate will not rise so fast. If interest rate rises fast, the value of his investment will drop, very fast. (Interest rates rises, bond-like investments drop). Speculation in the term structure is definitely not for the faint hearted. Banks generally employ very smart people for it. Not passive investing for sure.<br />Having said that, this is definitely a strategy to make money!<br /><br />I believe that the governments will continue to print money, continue to believe that inflation is tame, continue to believe that the real economy is fragile and will keep interest rates low. So I will borrow money from the bank at a low interest rate, lock in for 5 years and reinvest in properties in the Asia. The rental will cover my borrowings and after 2-3 years, I will sell the property for a good profit. This is definitely not passive investing but reasonable speculation.<br /><br />You can also participate in the so called carry trade. Borrow from low interest rate and invest in high yield currency. Economists will argue that high yielding economy is fighting inflation. Therefore the currency will depreciate. So this is not such a good idea. But for the past 30 years (with exception of some hiccups), it works.<br /><br />This reminds me of the black swan. This strategy is picking pennies in front of steamroller. You can make money. But please, do not call it passive income. Theirs is huge risk involved. Therefore if you are right, you deserved to be rewarded.<br /><br />So you want to get rich? You decide!<br /><br />Toh Wee<br />My last blog post <a href="http://everydayzentrader.com/2011/04/20/top-10-trading-blogs-every-trader-should-be-reading/" rel="nofollow">Top 10 Trading Blogs</a>Zen Traderhttp://everydayzentrader.comnoreply@blogger.comtag:blogger.com,1999:blog-37872616.post-18484363927106840822011-04-21T22:11:43.139+08:002011-04-21T22:11:43.139+08:00When you still have spare cash sitting in your ban...When you still have spare cash sitting in your banks earning at low interest rate, do you still want to borrow more from the banks to do leveraged investing?Createwealth8888https://www.blogger.com/profile/08563834016250153049noreply@blogger.com