Also known as gearing or leverage, borrowing to invest is a high-risk wealth strategy. You can increase your total amount available for investment by adding borrowed funds to your own which can then be invested to maximise your overall wealth. While it is considered risky, gearing can also be a tax effective strategy as the interest on borrowings for investments are usually tax deductible.

Australians have historically geared into property via a mortgage. Gearing into the share market can increase your returns when markets rise, but losses can be devastating when markets fall. Hence, borrowing to invest is not for the faint hearted. The more you borrow the greater the risk, as you have to repay the loan regardless of the performance of the investment.

Based on your financial situation, at Zeal Financial Services we help you evaluate if gearing is the right strategy for you. If suitable, it is crucial to have a plan and understand the associated risks of an unpredictable market and future. Having an effective plan, allows you to minimise risks and borrow as much as you can comfortably afford to repay.