Forum Archive Index - June 2001

["Mike Beal" <mike.beal@approved.co.nz>]

Hi Peter,

 

About 3 1/2 years ago I borrowed A$260K via GEI.  You can draw-down the loan whenever you want so I initially drew down about $200k and bought Telstra, Fletcher Energy, ANZ, NAB, and Rio Tinto.  Later I drew down the remaining $60k and put it into AMP and some more into Fletcher Energy. 

 

I've had rental properties so the GEI concept I rather liked - like rental properties the capital gain is tax-free, the interest is tax-deductible, and dividends help pay off the interest.  I haven't worked out the actual returns but I think they have been very attractive thus far - Fletcher Energy I bought at an average price of about A$4 (up $3 at time of unwind), the 2 banks, ANZ and NAB are both up over 50%, Rio Tinto's also up more than 50%, Telstra's up about 20% (even after the massive losses of the past few days!), AMP's been a bit of a loser but it's still up so that's okay.  Also, if they're decent companies the dividends are going up all the time so your cash outflow is decreasing.

 

I'm also a broker for the GEI system so feel free to email me direct for further queries: mike.beal@amb.co.nz 

 

Mike.

 

Has anyone used the Macquarie Bank Geared Equities Investment (GEI) programme? Sounds pretty good. They loan you money to purchase a parcel of Australian shares (13.5% pa interest, minimum A$50k, 100% finance). The good bit is that they guarantee to buy back the shares at purchase price or market rate - whichever is higher- so your only risk is the interest (which is partly offset by tax benefits and dividends). Would be interested to hear of anyone's experience with this programme.

 

Peter