Borrowing money to invest, also called gearing, can be an effective way to invest more and potentially achieve greater returns. The two most common forms of gearing are:
- Investment loans - use existing shares or units in a managed fund, as security for an investment loan. The money you borrow can be used to increase your investment base.
- Investment home loans - use the equity in your home to invest in more property or other types of personal investments, such as managed funds. Most investment home loans require residential property as security.
When deciding whether to undertake this type of strategy, we recommend you seek advice from a financial planner to determine if it’s the most appropriate strategy for you and to ensure you understand the associated risks. We also recommend you seek advice from a tax specialist in relation to the tax implications.
Things to consider when:
| Starting out |
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Gearing is a long-term investment strategy that may suit people who have at least 5 to 7 years to invest. An ANZ Financial Planner can look at your individual situation to determine if it’s an appropriate strategy for you, and help you understand the risks and benefits. |
| Mid life |
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Borrowing money against assets such as the equity in your home or existing investments, can help grow your investment portfolio. An ANZ Financial Planner can discuss the risks and benefits of this type of strategy. |
| Later years |
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As you draw closer to retirement, investment loans can present more risk than you might be comfortable taking. An ANZ Financial Planner can develop a personalised plan to determine if this is appropriate for you, given the long-term nature of this type of strategy. |
ANZ Financial Planners are representatives of Australia and New Zealand Banking Group Limited, ABN 11 005 357 522, the holder of an Australian Financial Services licence.
