The risks come from having to outperform your home loans interest rate (say 5.5-6.5% in Australia) with the shares you purchased with the investment loan. If your portfolio of shares grow by 10% you’ll cover that 5.5-6.5% & be able to claim the interest as a tax deduction while also having the extra 4-5% profit.
It really comes down to being able to beat the interest rate with share growth. You will be taking on market risk by purchasing shares rather then having the cash sit safely in an offset account.
Any risks with this strategy?
The risks come from having to outperform your home loans interest rate (say 5.5-6.5% in Australia) with the shares you purchased with the investment loan. If your portfolio of shares grow by 10% you’ll cover that 5.5-6.5% & be able to claim the interest as a tax deduction while also having the extra 4-5% profit.
It really comes down to being able to beat the interest rate with share growth. You will be taking on market risk by purchasing shares rather then having the cash sit safely in an offset account.
Thank you for the support. I will check out your newsletter!