Westpac Self-Funding Instalments

SFIs give individual investors and SMSFs increased exposure to shares.

Potentially benefit from the longer-term growth of the share market, with an initial investment outlay that’s lower than the market price of the underlying shares.

What are they?

Westpac SFIs are a way to borrow to invest in ASX-listed securities without the requirement to pay the full price for the security upfront.

How do they work?

Buy shares in two instalments, with the second instalment optional. Dividends and distributions are used to offset your interest expense.

Did you know?

SFIs are one of the few eligible geared investments for SMSFs.

Features and Benefits

SFI give an increased exposure to securities with a lower upfront capital outlay than direct share ownership. With an optional second payment and no margin calls, an SFI has no separate loan applications or credit checks.

Borrow to invest

Increasing your exposure to the share market using SFIs. However potential gains and losses can be magnified.

Receive beneficial interest in the underlying security

You retain the potential to benefit from capital growth, income through dividends and distributions, and franking credits (subject to holding period rules). Please refer to the detailed tax section in the PDS for more details.

Unlock value from existing securities

You don't need to sell your underlying shares. Use them to increase your exposure and, at the same time, free up capital to potentially grow and diversify your portfolio.

A level of protection

If the underlying share price falls and you decide to sell, your loss is limited to the amount you paid as your first instalment.

Buy or sell at any time

SFIs are traded on the Exchange, so you can buy or sell at anytime directly on the ASX.

Optional second payment

Sell at any time and benefit from any capital growth of the SFI. At maturity, if you elect to pay the second instalment, you receive the underlying security; if you elect not to pay, you walk away with no more payments required.

Risks associated with Westpac Self-Funding Instalments include:

  • While borrowing to invest more money in shares can increase your potential returns, it can also increase potential losses

  • The gearing level may change materially as the price of the underlying security and the loan amount change throughout the term. If the price of the underlying security falls, the price of the Westpac SFI will generally fall

  • The interest capitalised to the loan may be higher than the dividends received from the underlying securities, causing the loan amount to increase

  • Any rise in interest rates will increase the amount added to the loan as interest

  • You should also consider the taxation consequences. Investors should seek independent professional tax advice on any taxation matters.

Refer to the Westpac Self-Funding Instalments Product Disclosure Statement (PDF 1.08 MB) for more information.

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Any reference to taxation matters is a general statement only and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and proposed announced tax amendments. The individual situation of investors may differ and investors should seek independent professional tax advice on any taxation matters.

Westpac Banking Corporation ABN 33 007 457 141, AFSL 233714 (Westpac) is the issuer of the Westpac Self-Funding Instalments Product Disclosure Statement dated 1 February 2011 ('PDS').

Consider the PDS before making any decision to invest. This information does not take into account your personal objectives, financial situation or needs so you should consider its appropriateness having regard to these factors before acting on it.