Margin lending is a gearing solution where an investor borrows funds that will be secured by a portfolio of listed securities, unlisted corporate bonds and managed funds.
You can use margin lending to increase your exposure to the share market; both domestically and internationally.
You may choose to use margin lending to increase your long term exposure to an asset class, or to strategically increase your short term exposure to a perceived opportunity.
While a margin loan can increase your gains in a rising market, it can also magnify your losses when the market declines. Consequently, you should consider investing in a diversified portfolio of quality assets and ensure that you have enough time (and discipline) to ride out investment fluctuations.
A margin loan is a flexible line of credit that can be used to borrow money for investment purposes, such as investing in shares and managed funds.
For example, you can provide existing approved shares, or managed funds as your deposit, or equity contribution. You can then use the loan to pay for other new investments. The assets you contribute, plus those acquired with the borrowed funds, become security for your margin loan.
Margin lending introduces additional risk to your investment strategy, by amplifying the impact on your investment return from any rise or fall in the value of your portfolio.
It is important that you consider your individual financial circumstances. We recommend that you talk to your financial or tax adviser to discuss whether margin lending is a suitable product for your particular circumstances.
A margin loan can provide the following benefits:
While a margin loan can increase your gains in a rising market, it can also magnify your losses when the market declines. That’s why you should consider investing in a diversified portfolio of quality assets, gearing conservatively, and allowing enough time to ride out the inevitable investment market ups and downs.
You should also consider whether you have enough cash/other assets to:
Using margin lending to gear your investments may generally have the following tax consequences:
NAB is not a registered tax agent and the tax information contained on this website should not be relied upon to determine your personal tax obligations. You should also seek professional advice or guidance when deciding on the best solution for you. It is recommended that you also seek advice from a registered tax agent to determine the tax implications for you.