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What are the advantages of gearing?

Updated: 12/15/2022
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14y ago

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Advantages of gearing

  • Gear your savings to have more money working for you
  • More money invested means potentially increased returns
  • Having more money to invest allows you to diversify your investments
  • Tax effective because:
    - interest may be tax deductible and can be prepaid up to one year in advance
    - imputation credits on Australian shares purchased with borrowed money can further reduce tax paid on income
    - borrowed against your existing portfolio unlocks cash without creating a CGT liability
    - you may be able to defer payment of CGT until you sell your investments
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