Investment Trends, a research firm, has published its 2018 Borrowing to Invest Report today. The study, which takes a look at the behaviors of Australian online retail investors, found that there is a strong interest in using leverage to invest.
This is in line with the wide range of benefits that are currently recognized by Aussie borrowers, the report states. The study, which is based on 8,718 online investors, also found that more and more investors are willing to use debt to finance their investments.
This is looking to not slow down either, with Investment Trends modeling indicating 81,000 Aussie investors intend to begin using gearing in the next 12 months. However, not all will do so. In this time frame, a further 230,000 could be encouraged to do so, the statement said.
Commenting on the report, John Carver, Analyst at Investment Trends said: “Nationwide, an estimated 86,000 online investors are gearing their investment portfolio through a variety of methods, most commonly with margin lending products, line of credit secured against their home equity and home loan redraw facilities.”
Trading Places: Finding The Best Jurisdiction for Your BrokerageGo to article >>
“These borrowers firmly believe in gearing’s effectiveness as a wealth creation strategy and on a net-basis agree others their age should also use leverage to achieve their goals.”
Investment Trends Finds Millennials Driving Demand
According to the report, millennials are driving strong interest in gearing to invest. Specifically, around 52 percent of millennial investors said they would be interested in beginning to use borrowing to invest.
“Millennial borrowers recognize many benefits of leverage-funded investing, particularly its ability to facilitate greater investment given their cash flow and ability to achieve increased diversification in their portfolios,” added Carver.
“These benefits are cited more often than older borrowers, who are more likely to cite negative gearing as a key advantage.”