I don’t believe that they are for everyone as their methodology is very aggressive. I personally don’t agree with it. Below are some bits of information I’ve taken from Storm seminars held.
Their actual investments are quite solid. Nothing o/seas, just Aussie shares/managed funds of which a fair portion are index tracking investments. But the main difference is the level of gearing. It is just debt on debt. The moment portfolios are re-valued upward they increase the debt accordingly.
My understanding is that Storm as a group brokered a deal with Macquarie so that their clients could extend further than the maximum 70% gearing ratio that applies to most others looking at margin lending. I also am of the view that they say the debt is never to be repaid (or at least it is not a large part of the financial plan). As the assets grow so to does the level of debt. As I undertstand it, Storm don’t follow the rule of why you need to “retire” – or at least “retire” your money in retirement. They believe it is their to be used to create more wealth even in “old age”.
When markets are going well – this doesn’t seem a problem. But I think the way the market has been over the past 18 months it has highlighted a major flaw in the methodology. People need a certain comfort level at which they will sacrifice more wealth for a decent nights sleep and piece of mind. As you can see – I don’t think that their actual “investment” advice (where the money was placed) would be a huge problem for them as they were fairly conservative but the “big picture plan” is a bit out there for some.
Duckman
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