When you talk about leaps, it is basically longer term option going for capital gain while the strategy in post is more regarding for dividend play 7.5% minus leverage expenses 3.28%. It is a different topic in it's own right interesting nevertheless.
The reit strategy, very interestingly no one mention on pledging of their current asset such as reit shares and/or bank shares (which need to be KE valuation grade A to work best) for capital to buy more reits. In this case your pledged reit shares are providing an income (Dividend) while you have more reit shares bought for your marginal account providng more dividend to cover the leverage expenses.
This strategy is to ensure you are maximise your profit with share assets already providing a minimum of 5% dividend, as if you open the marginal account with only capital it is providing no additional benefit.
But why go down the margin path if you want leverage? Why not just buy LEAPS? You won't get margin calls, it's non recourse if shit ever happens and you also have the upside leverage.
No LEAPS? You can also just buy stock of a highly leveraged co that have similar characteristics as a LBO target. Same stuff. No margin calls, non recourse look through debt with unsymmetrical increase in equity/stock value for any increase in co asset value.
There are still other methods that one can get leverage from without subjecting yourself to the risks from using margin. Why use margin at all?
Always a good read ,enjoyed tremendously !
leverage is not for everyone. But good to know and I too believe in accumulating wealth slowly and steadily.
When you talk about leaps, it is basically longer term option going for capital gain while the strategy in post is more regarding for dividend play 7.5% minus leverage expenses 3.28%. It is a different topic in it's own right interesting nevertheless.
The reit strategy, very interestingly no one mention on pledging of their current asset such as reit shares and/or bank shares (which need to be KE valuation grade A to work best) for capital to buy more reits. In this case your pledged reit shares are providing an income (Dividend) while you have more reit shares bought for your marginal account providng more dividend to cover the leverage expenses.
This strategy is to ensure you are maximise your profit with share assets already providing a minimum of 5% dividend, as if you open the marginal account with only capital it is providing no additional benefit.
But why go down the margin path if you want leverage? Why not just buy LEAPS? You won't get margin calls, it's non recourse if shit ever happens and you also have the upside leverage.
No LEAPS? You can also just buy stock of a highly leveraged co that have similar characteristics as a LBO target. Same stuff. No margin calls, non recourse look through debt with unsymmetrical increase in equity/stock value for any increase in co asset value.
There are still other methods that one can get leverage from without subjecting yourself to the risks from using margin. Why use margin at all?
Always a good read ,enjoyed tremendously !
leverage is not for everyone. But good to know and I too believe in accumulating wealth slowly and steadily.