In sporting terms, finding another gear means to suddenly achieve an extra burst of athletic performance.

What if there was a way you could find another gear when it comes to your financial performance?

There is!

And funnily enough, it’s called gearing.

Gearing is simply another term for borrowing to invest. We’re often led to believe all debt is bad, but there is such a thing as good debt. In fact, it can be a powerful tool used to build wealth and to enhance your investment performance… it’s a strategy my wife and I use ourselves. 

Many of us have borrowed at one time or another to buy our home. Borrowing can also be used sensibly to invest further and create more wealth.

In fact, many of us borrow to buy all sorts of things that go down in value or have no ongoing financial value, such as cars and holidays. So, when you think about the concept of borrowing to buy things that are going to go up in value, it starts to seem like a pretty attractive proposition.

Gearing isn’t suitable for everyone, but for many it can be a highly effective way to lower your tax burden while simultaneously building wealth for your future.

The exact same logic behind borrowing to buy a home applies to borrowing to invest. It’s using borrowed money to buy assets and benefit from the gains, rather than spending longer trying to save up and buy the asset with no borrowings.

There are different ways you can borrow to invest, including drawing down on the equity in your home, using an investment loan from a bank or a margin loan for investing in shares and managed funds.

Each type of lending has pros and cons and while the benefits of a long-term, well-thought-out gearing strategy can be substantial, borrowing to invest in anything is not without risk.

So, it’s important to consider many factors before deciding to borrow to invest. I see too many people who don’t know what they’re doing, getting big loans to buy investment properties with no real plan other than just hoping the property will go up in value.

One of my favourite things about gearing is that you don’t have to borrow hundreds of thousands of dollars all in one go and buy an investment property. There are ways you can get started with a very small amount and then add to the investments over time with small additional borrowings combined with small amounts of your own savings on a regular basis. This is called regular gearing and it’s exactly what I do myself.

If you’re interested in borrowing and investing sensibly and with careful planning, then I’d love to have a chat and see if I can help you create success on purpose.

This is just one of many ways to get rich slowly. Local mortgage broker, Amanda Gleeson, from Compari, and I will be running a GET RICH SLOWLY seminar at the Ex-Services Club on Monday 15 July at 6 pm. It’s a free event, so head to wealthtrain.com.au and book a seat if you’d like to hear from two local and experienced financial professionals.

Cheers,

Daniel

If you’d like to find out more about how INDEPENDENT financial advice could help you manage cash flow, pay off the mortgage faster, get the most out of super and invest wisely, then get in touch on 0411 484 464 or head to wealthtrain.com.au.

Daniel McGregor is the man behind Wealth Train and is a member of the Independent Financial Advisers Association of Australia. This advice may not be suitable to you because it contains general advice which does not take into consideration any of your personal circumstances. All strategies and information provided are general advice only.

Daniel McGregor and Wealth Train are authorised representatives of Independent Financial Advisers Australia AFSL 464629

Amanda Gleeson, from Compari, and I will be running a GET RICH SLOWLY seminar at the Ex-Services Club on Monday 15 July at 6 pm. It’s a free event, so head to wealthtrain.com.au and book a seat if you’d like to hear from two local and experienced financial professionals.