Gearing (Borrowing To Invest)

Gearing Strategy
What is Gearing?  Put in simple terms it is a strategy whereby you borrow funds from a lending institution/s to invest in properties, shares and managed funds, whilst using your existing investments or cash as security (collateral) for the initial deposit.
By giving you access to additional capital to create a bigger Asset Base, an investment loan can potentially improve your investment returns and help you reach your financial goals sooner.
However a Gearing Strategy is a “Double Edge” sword strategy and carries a number of inherent risks and might not be suitable for everyone.

There are three different types of Gearing Strategy:

  • Negative Gearing
  • Neutral Gearing
  • Positive gearing

Contact us to assess which type of Gearing Strategy might be more suitable for you.
SMSF and Gearing
CRA Financial Services/ AMP offer a range of gearing packages to help SMSF Trustees borrow to invest in Properties through their SMSFs. We are fully accredited and qualified to help you from A-Z in your SMSF Gearing Strategy.  For instance our options range from having CRA Financial Services arrange the SMSF loan and all associated documentation and compliance work to ensure a smooth, quick and efficient set up and running of your SMSF.
For more details, please see the Self Managed Superannuation Fund section on our web site.
Margin Lending
CRA Financial Services/ AMP can also arrange to have an investment loan (margin loan) that let you borrow money to invest in shares and managed funds, while using your existing investments or cash as security.
Home Equity Borrowing
A common gearing strategy used is to tap into the equity of your main residence or (or your investment property) to create another investment base which in turn can generate further income and capital growth.  This can be particular useful in “debt recycling strategy” and helping you to pay off your home mortgage faster.
For more details, please see the Mortgage and Other Debt Reduction section on our web site.

Contact us on inquiry@nbfinancial.com.au for an initial consultation at a place and time convenient for you to learn more about Gearing Strategies and whether they might be suitable for you.