Forum Archive Index - September 2000

[Brian Gale <brigale@i4free.co.nz>]

Sorry you got cold feet Tony, 'cos I think you were fundamentally right.
It sure stirred up a hornets nest, I'll give it another poke. There were
two errors:-

(a) Don't give unsolicited advice to the younger generation, "Get
with it Dad times have changed, have a drink of 'V' and you'll get the
message "

(b) This isn't  an ordinary debt it's a Student Loan.

Times have sure changed, nowadays every lending institution is begging
you to take their money. We have become a debt riddled society, it's a
way of life. The private debt total climbs ever higher and Baycorp does
very nicely, thankyou, picking up the pieces. Is there an upper ceiling ?
There surely must be, economies have collapsed through excess debt.

I confess to not knowing very much about student loans, apart from
students protesting that they are unfair in various ways, but I naively
thought they were supposed to help students, who otherwise would have
financial difficulty, to pay  their living expenses and tuition
fees. I was more than surprised to learn that is not the case and in fact
the money is in the category of  ' easy come easy go'

Of course the whole question is coloured by the fact that once the
student has finished training there will be a fat salary to take care of
the outstanding loan, so it becomes quite different to the usual
borrowing situation. Most of us less fortunate mortals on modest incomes
have to adopt a more prudent approach to  loans.

Coming back to the point which is "should you borrow money to invest
in the sharemarket" 
Being a ' dyed in the wool'  fundamentalist and following advice
constantly repeated the answer has to be "not recommended" and
the reasons are fairly obvious - it is a high risk investment where money
is easily lost ( with the prevailing NZ situation all too easily) so the
sensible rule is to only invest money you can afford to loose. Normally
if you borrow money you have to pay interest so your investment has to
show a better percentage return than the interest before you break even.
I still believe in the Macawber concept.

Of course I've now fallen in the trap in (a) above, I only state it for
the record.

BG

 At 20:58 28-09-00 +1200, you wrote:
> Ok,
> ok, all my life I have been plagued by a mouth that engages before
> brain...the point I was clumsily trying to make can be summed up by
> saying that many share traders lost a lot of money in the 87 crash. Only
> those who bought shares with borrowed money actually lost more than they
> had to lose though...
>  
> Now for a change...what price
> will FLB close at tomorrow ??
>  
> Rgds,    Tony
> Haddon