Trading global stocks the LIC way
1 December, 2008Why structured products must regain trust
1 January, 2009Smart Investor magazine: Up To Speed, column, January 2009
NEW PRODUCT
Adelaide Cash Management Account
What is it?
It’s a new cash product.
Cash? What’s interesting about that?
This one comes on the back of the new government guarantee of all bank deposits, which covers holdings up to $1 million. It’s designed for existing customers of the Adelaide Cash Management Trust who want to transition to a guaranteed product, as CMTs don’t qualify for the government guarantee.
What does it do?
Like all cash accounts it’s designed to allow you to switch cash easily into other products – one reason these things are very popular with financial planners – and it allows for direct credits, BPay, cashcard access and cheque book, with interest calculated daily. In this case it also allows investors to leverage 100% of their cash deposit into a margin loan facility through Leveraged Equities (an Adelaide Bank subsidiary).
Is that wise?
If we’ve reached the bottom of the market, you couldn’t find a better time for a margin loan. If we haven’t, there’s a risk you’ll be hit for a margin call. However this product appears to allow you to have a government guaranteed cash balance as security on a margin loan.
What rate is it paying?
At the time of writing, 4%.
