The first thing to be clear on is what your investment goals are and when you want to reach them. Setting a realistic timeframe can help you achieve your personal investment goals and stay focused.
Be honest about your risk tolerance. Do you want to play it safe or are you prepared to ride the ups and downs of the market? These are just some of the things you'll need to consider when preparing your investment plan.
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Equity is the difference between what your home is worth today and how much you currently owe on it. For example, if your home is worth $400,000 and you owe $150,000, you have $250,000 in equity. Your equity may support further borrowings. Typically, many lenders allow you to borrow 80% of the value of your home without mortgage insurance. In this example, 80% of the property value is $320,000. Subtracting what is currently owed, $150,000 from the 80% of the property value $320,000 leaves $170,000 potentially available to go towards your investment purchase.
You may be able to borrow more than 80% of your home value if you are approved for mortgage insurance and if you can service the loan, however there are costs associated with this.
Laurie has $170,000 that she wishes to invest for her long term wealth. After some research, including professional advice from a financial advisor, she decides to invest in both managed funds and direct shares to try and achieve her investment goals.
|Account type||Purpose||Loan amount||Security description||Loan type|
|Laurie’s home valued @ $500,000|
|Loan 1||Managed Funds||$100,000||Residential property||Variable|
|Loan 2||Direct Shares||$70,000||Residential property||Interest only|
|Investor account||- Deposit dividends|
- Simplify administration
Some things to note.
The most important part of making your investment plan work is creating a practical budget. Sticking to your budget means you take full control of your finances and helps ensure you have enough money to pay your investment-related expenses such as repayments.
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