Financing shares through debt

[Rams]

Leverage, the same leverage that caused the crash! There is no certainty that a particular individual will be able to get a return on shares that is more than the cost of borrowed capital even if the JSE returned more than the prime rate.Fear, greed blah blah blah..

[WES]

A business that uses credit grows faster than one that doesn't. Why will the principle not apply to using your bond to purchase shares ? Yes there is risk, but isn't there always risk ? Your portfolio will grow faster. You can not save yourselve wealthy.

[#3]

Wess and Skaap and all, Yes I agree with you in part. The issue however remains that unless you do the correct contracts (even if you are borrowing from yourself) for repaying the debt from your homeloan (and very few actually treat this "loan" as business and have the discipline to really treat it as such) SARS will kill you on attempted deductions. Also the original Q was what to do with profits from a sale of property, not to loan against an existing bond. My advice still remains become debt free - pay of the HL and then borrow against it if you do it correctly. But the key is personal debt free-dom!!

[Rams]

It seems el nino has disappeared.The topic is "Re:Financing shares through debt".There is no mention of profits but proceeds which could be proceeds from the bond. Anyway, buying shares is not the same as a conventional business...

[#5]

I don't deduct anything, dividends are tax free. Interest deductions are only applicable for property buy-to-rent, because the rental income is taxable. Admittedly the redefine income is taxable, but at 9% return, I take the hit, although I probably could get creative and deduct a portion of my bond repayments. So SARS has got no impact on my 'borrow from bond to finance shares' strategy

[louisg]

Perhaps not a conventional business, but a long term portfolio of shares is no different to a holding company.eg Remgro.Albeit completely passive. I certainly treat my long term portfolio as a business. I view my portfolio in the exact same manner as my other "hands on" business. I simply cannot think of a better business to manage/run. No/very little overhead and bureaucracy, no staff, highly liquid(at my level), etc...

[CHATTYCHAT]

if you HAVE to buy a car, your housing loan provides the cheapest financing option, save for some of the inhouse financing available from financial services companies which is found to hook up with vehicle outlets. Difference is, with a installment sale you are bound to restructure each time you have cash to invest in the debt, whilstthe flexi (house) bond allows deposits and withdrawals at will.