Investment lending underrated
Peter van der Westhuyzen
Australian investors who refuse to consider investment lending and associated strategies such as instalment gearing could be missing out on an opportunity to substantially boost their returns, according to Macquarie Investment Lending’s Peter van der Westhuyzen.
A recent Macquarie-commissioned survey of high-net-worth Australians (those with more than $500,000 in liquid assets) found that 27 per cent already have an investment loan and a further 10 per cent would consider getting one. This leaves 63 per cent who would not consider using this strategy to boost their investment returns.
However, van der Westhuyzen believes investment lending could potentially double many investors’ returns.
“There was a time when investment lending was considered to be suitable only for those investors who had a lot of capital or were willing to take on a large amount of risk,” he said.
“Today, however, this is definitely not the case.”
The survey also found that investors aged 60 or above were least likely to consider investment lending; however, van der Westhuyzen said the strategy could be as valuable to them as younger individuals, particularly if they are seeking an additional income stream to support their superannuation.
“[We] have a number of retired clients using lending to boost their investments, helping to generate steady growth and allowing them to draw a regular income to contribute to their living costs.
“Just because these investors are … entering a new stage in their lives doesn’t mean their investments need to. If, for example, they are aiming to leave a financial legacy for their family, an investment lending strategy can be a particularly effective way to ensure they maximise the amount they can leave for future generations.”
Recommended for you
Insignia Financial has announced the status of the two private equity bidders as due diligence comes to an end, with one bidder opting to pull out.
The corporate regulator has cancelled the AFSL of a Queensland-based financial services provider, having held the licence since mid-2016.
The financial advice industry has reacted to the appointment of Dr Daniel Mulino as the new Minister for Financial Services, with hopes for improvements in legislation and education standards.
With less than one-third of Australian business owners seeing an adviser, Business Health has detailed how advice practices can successfully target this underserved client segment.
