Borrowing to invest
| If you borrow up to your eyeballs, especially if you're investing for the first time, you're risking financial ruin. |
If you are thinking about borrowing money, and especially using negative gearing, to invest in managed funds, shares, real estate or some other investment, FIDO has some general tips that may help you decide if this suits your personal situation.
- Gearing means borrowing money to invest.
- Negative gearing means your borrowing costs (interest and fees) exceed the income you receive on your investment.
- Positive gearing means your borrowing costs are fully covered by the investment income.
Should you borrow money to invest? Why do people get into negative gearing? Can you afford it? What if interest rates go up? Read FIDO's answers to these questions which people often ask
Here are some rules to keep in mind if you're thinking of negative gearing into the stockmarket.
More about borrowing money, including tax issues
FIDO Website: Printed 02/10/2010
