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Awaiting a global downturn...??

Discussion in 'Trading Strategies/Systems' started by Tomboy77, Aug 25, 2019.

  1. Tomboy77

    Tomboy77

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    Thanks @craft . I will read the above posters threads as suggested. The more I learn the better .

    I am in the process of transitioning to a new lender actually. I found 'WellHomeloans' who are on online lender with a current variable rate of 3%, (1.5% cheaper than my current 4.5% rate with Bankwest).

    Once 'well' is set up, (new 30yr term at 3%) I will continue to pay into it at the rate I currently pay Bankwest. This will be as if 'well' is a 20 year loan at 4.5%. If I can pay new loan at that rate I should hit the principal faster and save about $50k over the next 20 years (assuming rates don't change... As if that would happen).

    Anyway, I read today that rates are likely to stay low for a few years at least, so if I can hit the mortgage a bit harder for those years that will help.

    Thanks again @craft .

    Tom
     
    Faramir, craft, willoneau and 3 others like this.
  2. craft

    craft

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    That is awesome that you have already addressed your loan interest rate.

    I’ve done some quick numbers.

    upload_2019-8-28_23-16-27.png

    Calculation (a) is 150K for a 30-year P&I at 4.5%, your original situation.

    Calculation (b) is your new situation of 3%. Clearly the savings of time and interest are huge. Kudos for getting this done, it makes the biggest difference and doesn’t cost you a cent. The key as you state is keeping your repayments the same so that you make quicker inroads into the capital.

    Calculation (c) is lump summing the 10K you have for investing now into the mortgage.

    Calculation (d) is the lump sum plus an additional $625 per month (halfway between the 5 & 10K you mentioned you could save.)

    The calculations (c) and (d) should provide a basis for comparing alternative trading or investing opportunities against.

    I assume your original loan was for more that 150K so your original loan repayments would be higher than these examples which means you crush the loan even quicker and save even more interest.

    Understanding how much you can save by small changes in interest rates and hitting the principle as early as you can is a great start to appreciating the power of compounding – A vital investment insight.
     
    sptrawler and fiftyeight like this.
  3. Tomboy77

    Tomboy77

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    Hi @craft .

    Thanks very much for the numbers above. It certainly makes for a compelling argument looking at option C, and even more so option D!!! Knocking basically 10 years off my mortgage and paying only about 20k interest would be bloody amazing!!! If I was mortgage free at about 50 years old that would be a huge milestone for me.
     
  4. bngood

    bngood

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    So I think the question is can you make more on your $10,000 than 3% compound a year? I think you can but you would have to be disciplined.
    If I were you (and I am not you but I have been in your position). I gave up my day job at 40 to trade for a living full time.

    1) Get out of the ASX entirely until you have a trading plan. There are hundreds of ways to make money on the ASX you have to work out what suits you.

    2) See an accountant to see the best structure you should be using to invest in shares. Your wife (while not working) has a tax free threshold of $18,200. If you had all your “investment” money in her name you could earn $18,200 before you pay any tax.

    3) Buy some books on trading and charting. Go to the library. I am not talking about day trading or forex but share trading. You need to have a written trading plan and know about candlesticks and chart setups before you buy any shares. Louise Bedford’s books are good – she shows you how to work out a trading plan and charting patterns (don’t get caught up in paying for educational stuff - you can do it yourself out of books without paying anything).

    4) You need to work out a trading plan that will work for you: that you are comfortable with, that suits your work, life and time commitments. The most important thing about your trading plan is your exit. You can buy anything at anytime but you need to know when to get out. An exit for me is a stop loss. I personally don’t think anyone can make money without one especially with a small bank balance. You cannot afford to lose money. I have an initial stop loss of $300 on every single trade. You need to work out an amount you are happy to lose (and you will lose it so you have to be sure that you are prepared to cut your losses when you stop is hit). Your aim is to have every cent of your capital working for you (gaining).

    5) Once you have your trading plan and you’ve chosen your first share because you have researched it to death fundamentally and you have been patiently waiting for a perfect set up on the chart according to your plan you get out your trading diary and work out when you will get out in writing. So you are prepared to risk $2000 of your money and you look at 2,500 shares of DDD at 76c = $1900. You are prepared to lose $300 so $1900 - $300 = $1600/2,500= 64c. (If you include brokerage this will be higher). When your share closes below 64c you sell. You can now buy your share. Watch your share. If it closes below 64c and you don’t sell you can’t trade shares so go back to your day job and put your extra money in the bank.

    6) If you are still determined to do this but can’t stick to stop losses you can set an automatic stop loss before you buy your share. The disadvantage of this is that sometimes intraday trading will take out your stop loss but it is better than being stuck in an unsuccessful trade.

    7) Paper trading is a good way to go initially to see if you think you can trade and your system works but there is nothing like the test of a stop loss to see if you really can trade.
     
    qldfrog, BoNeZ and Skate like this.
  5. Tomboy77

    Tomboy77

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    Hi again guys,

    I have just read back over this thread after some time has elapsed. My SPX shares dropped from 0.11c to a low of less than 0.07c since I was last on here, then just today reached back up to 0.11c.... But now there is news of a legal battle about to begin, so SPX share price will likely take another hit (tank) tomorrow at 10am!

    I just held on through the drop to 0.07c and was thinking that I might even start to see a climb but looks like this legal battle (between VMC and SPX) is about to hit that possibility on the head!

    I'm assuming mass exodus from SPX tomorrow... I will watch and continue to hold in hope that a longer term outlook (another 12 months) sees SPX develop a great resource that is ready to be mined.

    What a learning experience...!!!

    Gulp :bookworm:
     
  6. sptrawler

    sptrawler

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    As long as you keep track of where you would have been, having taken other options, we will all learn something.
     
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