Gearing
Gearing is an aggressive form of Investment where an investor uses borrowed funds to invest in a financial resource, with the intention that it will increase the investor's return at a greater rate than the cost of the finance. Gearing brings many risks with it.
Our Financial Advisors are skilled at determining whether a gearing strategy is appropriate for your personal situation and your risk profile and to what extent it is best suited to your plans.
As a general proposition, Negative gearing, as the most common form of gearing, occurs when the costs of an investment, including the interest paid in respect of the money borrowed, are greater than the income generated from the investment. This position usually translates into an income loss on the investment, which is generally tax deductible. The main benefit from this form of investment is using pre-tax money to pay for the cost of investing.
The intention of this investment scheme is that the long-term capital growth of the investment is greater than the short-term income losses and costs of the investment. However, in many cases where people attempt this form of investment without the assistance of trained and skilled advisors, the investor has been worse off than before the investor made the initial investment.
There are a number of asset types that investors can gear into. Property is the most popular. An alternative investment is to gear into shares (both Australian and international), which provide greater liquidity and other taxation benefits. The role of the Financial Advisor will be to assist you in choosing whether this strategy is beneficial to you and in which investments you will be able to make money.
We invite you to contact us.
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