Debt allows us to buy things that we would otherwise not be able to own and enjoy, like the family home. What’s more, using debt the right way can be a great way to create wealth and reduce tax along the way.
The trick is to make sure you’ve got the right type of debt, and that this debt is working for you in ways that will help you achieve your financial goals and objectives. This might include paying off debt that is not helping you ‘get ahead (for example, your credit cards): or it might even include borrowing to invest (and ensuring the interest is tax deductible)
Gearing simply means investing with borrowed money, allowing you to acquire assets other than those you would otherwise be able to own. This can be an effective way of building wealth over the longer term.
Even if you don’t own your home, you can still invest in your financial future through a well-managed gearing strategy. Using the equity in your home, for example is a common strategy for investing in other assets such as shares or managed funds.
You’ve probably heard that gearing can reduce tax. It also allows you to hold assets that have the potential to grow in value over time. Remember, though, that while gearing can magnify your gains, it can also magnify your losses. As a result, it’s not for everyone.
Click on ‘Enquire Now’ to make an appointment with us today to discuss whether a gearing strategy is right for you.