Jim Gleeson - Financial Planner
"I cannot direct the wind but I can help you to adjust the sails."
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"No advice" Ezicover Insurance
Ezicover insurance offers:
- A lump sum payment of up to $500,000 on death or terminal illness.
- A lump sum payment of up to $150,000 on diagnosis or occurrence of a heart attack, stroke, cancer or coronary artery by-pass surgery.
- A monthly payment of up to 75% of your average monthly pre-tax income if you are unable to work due to sickness or injury.
- A lump sum payment on accidental infection of HIV (Human Immunodeficiency Virus) or Hepatitis B or Hepatitis C while working in specified occupations.
- "Do It Yourself" insurance.
Gearing Strategies
Gearing strategies or margin loans allow you to borrow to invest in shares, managed funds, cash deposits, master trusts and assets within wrap accounts. You can also use the borrowed funds for other investment or business purposes such as an education savings fund.
Using your own funds in combination with borrowings enables you to increase your investment opportunities, more than if you were solely using your own assets. As with any leveraged investment, the objective is that your portfolio will grow in value over time.
Negative gearing has a higher level of risk for an investor because income from another source, often from a salary, is needed to meet the interest payments. The tax benefits of negative gearing may partially offset this cost.
Positive gearing, on the other hand, is when investment income exceeds the borrowing cost. The benefits of leveraging include the potential for increased returns, the ability to diversify your portfolio along with potential tax benefits.
Reduce Risk!
- Conservative level of gearing (i.e., between 50-60%)
- Diversified portfolio
- Investment Selection in ASX100/150
- Avoid speculative stocks
- Investments with reliable dividends that cover a large proportion of interest
- Don't capitalise interest for extended periods
- Have the necessary personal insurance in place
The most important factor is to select the right securities and investment structure for your own personal situation. Accordingly, it is critical to talk to your financial adviser before leveraging into the stock market.
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Disclaimer | Financial Services Guide