-=> Andrew Freeman wrote to Graham Comitti <=- 
-=> On 11-24-94 about Dividend Re-investment p <=-

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AF> GC> BTW I think that one the best schemes currently associated with
AF> GC> shares is the Coles Myer shareholder discount card.
AF> GC> Anyone/family who spends around $100 a week in participating
AF> GC> stores could be getting an Income  return of around 22.5% in the
AF> GC> 2nd year (without gearing) (and around  193% if they borrowed
AF> GC> $2000 to buy the 500 ordinary shares necessary to  participate)
AF> GC> this is tax free/paid return on share price of around  $4.20. 

AF>I would be interested to hear more about this.

Not much to say about it but its basically like this;

After you hold a min of 500 ordinary or 100 preference shares for six 
months you receive a shareholders discount card, which enables the 
nominated card holder (the share holder can nominate for someone else to 
be the card holder) to discounts of between 3% and 10% at Coles and 
associated stores (ie Target, KMart, Fosseys, Bi-Low, etc) We have found 
that we  generally get 7.5% at Coles,Target,KMart, so I'll use the 7.5% 
discount in general, and share price of $4.20+ $55 costs.  So in round 
figures in general this is how it works out, 

500 shares at $4.20 = Share cost of $2100
Brokerage & S/D = around $55
Total share costs =  $2155

FF Div ($140 grossed up) = approx $95 net,
Avg spent in Coles etc. $100 wk = $5200 yr {at} 7.5% = approx $195 discount 
savings in the 1st yr as card only used for 6mths. gives total tax 
free/paid return of $290 = around 13.5% return on investment of $2155.

and in a full year the discount savings of around $390 plus the $95 
ffdiv gives total of $485 = around 22.5% return on the $2155.

Gearing into the shares could show pretty good income/savings returns 
also

If one had a taxable income at around $22000, and borrowed $2000 at 
interest rate of say 14%, and used $155 of his/her own money to buy the 
shares at $4.20. then 


$2000 at 14% = $280 interest less around 35% tax rebate = actual 
interest cost of around $185, so using same criteria as above
in 1st year we have saving of $195 add ffdiv of $95 = $290
less $185 actual interest cost = total of $105 = around 67.7% return on 
investment of $155.

In the 2nd yr we have $390 discount savings plus $95 ffdiv less $185 
actual interest costs = total of $300 = around 193.5% return on 
investment of $155.

Anyway that's it in round figures, and its not bad income/savings 
return, would be hard for mums & dads to get a better long term 
investment.  One would hope that the capital return on the shares at 
least kept up with inflation etc.



Regards, Graham from Sunbury

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X CMPQwk #1.4X UNREGISTERED EVALUATION COPY

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