Got the guts to gear?

As interest rates fall, the numbers on borrowing to invest add up.

Summary: As interest rates on loans fall and share market yields remain strong, perhaps a little extra risk is worth considering. A hypothetical $100,000 portfolio could return $1000 more in dividends than the cost of borrowing. A higher-yield portfolio could perform even better.

Key take-out: If you are considering borrowing to invest, make sure your strategy can cope with a market downturn of 50% or more. Also make sure to have a plan to pay off the loan over time.

Key beneficiaries: General investors. Category: Shares.

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