Answer Two

Instalment Gearing

In simple terms, instalment gearing is a savings plan where your regular contributions are matched by a third party.

With instalment gearing, you have at least twice the market participation as you are investing not only your monthly savings, but you are also adding borrowed funds from a third party – although you will have an interest cost as the third party is borrowing to invest.

The main advantage of instalment gearing is flexibility. You can start it, stop it, sell part or all of it, change the borrowing amount, suspend your contributions or the borrowed contributions at any time.

By contributing regularly (typically monthly) you can benefit from a Dollar Cost Averaging effect which gives you a way to enter the market without attempting to pick the highs and lows.

A typical instalment gearing plan could look like this:

You initially contribute $1,000, this contribution is matched with debt giving an initial investment of $2,000. Each month you contribute $200 and this contribution is also matched by $200 of debt giving a monthly investment of $400. After one year, you will have contributions of $4,800 plus the initial contribution of $2,000 and you will have a loan balance of $3,400

Savings Plan

Do you spend your entire income, or are you already putting some away as savings?

If you are saving, do you prefer the ‘bucket’ approach where different savings buckets are set up for different objectives or timeframes – e.g. do you have a holiday, house deposit or wedding fund?

Or do you prefer to consolidate all your savings into one investment to maximise your returns – e.g. have you got one high interest savings account, or money invested in a term deposit?

However you like to save, we can work with you to maximise your savings plan by finding the most tax effective way to invest your savings and watch them grow!

Not a saver? Not a worry!

We will work with you to figure out the best savings plan to suit your individual circumstances and ensure you see long term returns with minimal tax.

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