In positive market conditions gearing, or borrowing money to invest, can be a powerful way to increase your wealth.
Borrowing money to invest is only worthwhile if your after tax investment returns are greater than the after tax interest you pay on your borrowings. Carefully planned gearing strategies can accelerate your wealth creation in a tax efficient way, poorly planned strategies can be tragic. It’s important you have the best advice available before embarking on a gearing strategy.
In our experience, clients who come to us for gearing strategies generally have an appetite for risk and can cope with potentially large fluctuations up and down in their investments. They have a strong and secure cash flow protected by the right levels of insurance. They are on a higher marginal tax rate and have a medium to long-term investment timeframe.
Talk to a Sherrin Partners’ adviser today to work out whether gearing is suitable for you.