Gearing is a term for borrowing money to buy investments. You can purchase property, shares, and ETFs using borrowed funds. You may want to consider gearing shares and property. However, it is recommended you seek professional advice before you do so.
Having recently reviewed the book, The Australian ETF Guide by David Bassanese, I was intrigued by a conversation I had with Peter Moussa from Leveraged, a fully owned subsidiary of Bendigo and Adelaide Bank regarding leveraged ETFs when I was at a seminar.
ETFs may allow you to invest in either shares or real estate (through REITs)
Traditionally investors have borrowed to purchase property and paid cash for shares. I have found the general consensus among authors of Australian share investment books is that borrowing to invest in shares increases your risk profile in what can be a volatile market. In addition, the retail investor will have higher borrowing costs and may be subject to margin calls and strict rules of trading.
In his article, Peter presents an alternative means of leveraging into shares through the use of leveraged ETFs.
I hope you enjoy his article, Gearing: Shares Vs Property
Glenis Phillips, F Fin – Designer of Financial Mappers
Here are some additional articles I have found for you:
- Gearing: Shares vs Property (Leveraged – Investment strategies)
- Investing in shares vs direct property (Morgans)