What is regular gearing?

Regular gearing is simply combining a regular investment plan with a margin lending facility. It's like a regular savings plan, only using gearing to invest more each time. You can only regular gear into managed funds investments and not direct shares.

How does regular gearing work?

Every time you add to your investments through a regular investment plan, you can also borrow funds up to the LVR allowed for each managed fund using a BT Margin Loan. This means you increase the amount you can invest each month and potentially magnify the return on your equity.

The minimum regular investment amount from the margin loan each month is $250

For example:

An investor has a regular gearing strategy into the BT Australian Share Fund and the BT International Share Fund. The investor contributes $300 per month from their savings account. The investor has selected a gearing level of 50%. Therefore the contribution to the managed funds are as follows:

Name of managed fund

Investor Equity

Margin Loan

Total Investment per month into Fund

BT Australian Share Fund

$150

$150

$300

BT International Share Fund

$150

$150

$300

Therefore in the space of a year, the investor has contributed $3,600 of their savings across both funds and also has a margin loan of $3,600.

Note: We may terminate the regular gearing arrangement at any time if we consider that a loan contribution may result in the amount outstanding under your facility exceeding either your borrowing limit or your credit limit.

Which BT Margin Loans are you able to regularly gear with?

You can regularly gear using a Standard BT Margin Loan or the BT Margin Lending Online loan.

Other benefits of regular gearing

  • You get all the benefits of dollar cost averaging - buying more when the market is down and less when the market is up. This can smooth out the highs and lows of investing.

  • Regular gearing can increase your potential gains if managed correctly. However, it can also increase your losses if the value of your investments falls.

  • It's a simple, automatic process.

  • With more money to invest you can diversify your investments - a proven method of reducing risk and increasing returns.

  • Margin loan interest may be tax-deductible and can be prepaid up to one year in advance.

Risks of regular gearing

  • Unit prices may fall

  • Interest rates may rise over the term of the loan

  • LVRs may fall

  • Taxation laws may change

To apply

If you already have a BT Margin Loan and want to set up a regular gearing strategy complete the Managed Fund Transaction Form. Please check with BT Margin Lending on 1800 816 222 to check that the managed fund you wish to regularly gear into has approval.