Unit Trust financing

[Timperial]

I once heard from someone about UT financing from a foreign bank but can't find anything online. Anyone heard of this.

ie Investment capital is $10k and borrowed up to $20K from bank
Total UT investment $30K with interest of 2%

something lidat

 

[sub_07]

Yes.. There's such things. It's basically leveraging on your initial capital. But depending on how 'safe' your investment is, they will determine maybe to loan you 60% or 80%. You can repeat this cycle as many times as you want. Hence from 10k you can leverage and be exposed to 30k or 50k worth of investments.

2% for sgd or usd? If you are referring to private banks, then it's usually usd, the cost of borrowing is between 1.1-1.3% at the moment.. Might even go up to 1.4% not so sure. But no private bank is going to entertain 10k.. Hehe. You need at least 1mil usd...

I know the local banks offers it in sgd. But can't remember what's the rate.

 

[Shiny Things]

I once heard from someone about UT financing from a foreign bank but can't find anything online. Anyone heard of this.

ie Investment capital is $10k and borrowed up to $20K from bank
Total UT investment $30K with interest of 2%

You can do this, but it's a bad idea.

What happens if the price of the unit trust goes down by one-third? If you hadn't financed it, you'd be down one-third, which is painful but it's not the end of the world. But if you've financed it with 3x leverage (borrowing 20k, in your example), you're suddenly bankrupt.

 

[Keverus]

financing/leverage does not make u a better investor, it amplifies your ability.

 

[wahkao3]

2 things are very wrong here:
1) UT
2) leveraging
i say leveraging is wrong because investment is already as risky as it is.... why purposely go and make it more risky by leveraging!?

 

[camelsback]

2 things are very wrong here:
1) UT
2) leveraging
i say leveraging is wrong because investment is already as risky as it is.... why purposely go and make it more risky by leveraging!?

i understand if you say leveraging is wrong (esp so for someone with only 20k savings).

but i dont understand why you look at UT that way. care to explain something that i may have missed.