ANZ E TRADE
Share Investment Loan
Any questions? Call 1800 639 330
Borrowing to invest could help you achieve your financial goals faster
An ANZ E TRADE Share Investment Loan works like an interestonly loan for an investment property. Using the loan means you have more money working for you, so you can increase your returns if your investments grow in value.
Buy more shares
Using funds from your ANZ E TRADE Share Investment Loan increases the amount you can invest, letting you buy more shares than you could using only your own money.
Increase your portfolio’s value
If you use your loan to buy more shares, you’ll grow the value of your portfolio faster if the shares increase in value.
Receive more dividends
You can own more shares using your ANZ E TRADE Share Investment Loan, so you’ll receive more income if the companies you invest in pay dividends.
Diversify your portfolio
Diversifying your portfolio can help reduce the volatility of your investments. You can use the extra funds to diversify your portfolio without having to sell any of your existing shares.
Tax advantages
Your interest costs are usually tax deductible because you’re borrowing to invest. You’ll also receive franking credits if the shares you invest in pay franked dividends.
Be rewarded
You could be eligible for our Cross-Rewards and receive discount brokerage depending on the size of your loan, and/or discount interest rates if you trade regularly through E TRADE.
Any questions? Call 1800 639 330
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How an ANZ E TRADE Share Investment Loan could boost your long-term wealth
Two investors, Sophie and William, each have $40,000 that they want to invest in blue-chip shares. William decides to purchase $40,000 of shares, but Sophie uses an ANZ E TRADE Share Investment Loan to match her investment and invests a total of $80,000. She decides to use her dividends to pay the interest, and every month she uses the extra funds available from her loan to add to her portfolio. Ten years later, William’s portfolio has increased in value to almost $100,000 – but Sophie‘s investment is now worth almost $140,00 after paying back her loan, having realised a return of over 13% p.a. after tax. William’s investment in the same shares has only returned around 9% p.a. over the same period.
Initial Investment Loan Portfolio value after repaying loan After 5 years Sophie William $0,000 $0,000 $0,000 After 10 years 13.% p.a. (After tax) 9.% p.a (After tax) Average return on investment over 10 years
$73,009 $138,86 $6,68 $98,880
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The graph compares Sophie and William’s positions, net of Sophie’s loan.
Sophie and William's Equity
$160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 0 1 2 3 4 5 Years 6 7 8 9 10 Sophie William
Assumes 9.99% p.a. interest, 40% p.a. marginal tax rate, 3.8% p.a. fully-franked dividends, 7% p.a. Growth and a maintained 50% gearing level but does not take into account transaction costs. These returns are an illustration only and are not a prediction or estimate of the actual returns you can achieve. Remember that gearing potentially amplifies your losses as well as your gains, so you should consider professional advice before borrowing to invest.
Any questions? Call 1800 639 330
How does an ANZ E TRADE Share Investment Loan work?
An ANZ E TRADE Share Investment Loan is an interest-only facility that works like a loan for an investment property. Applying is simple with our convenient online application form, and applications are usually approved within 48 hours. Once your loan is approved, getting started is easy.
1. Providing security
You start by providing your share of the portfolio (your “security”) in the form of cash or existing shares, just like providing a deposit to buy a property.
2. Buying more shares
You use the loan to buy more shares through E TRADE, and the entire portfolio becomes security for the loan. Whenever you buy more shares, the loan is automatically debited to pay for them.
3. Paying the interest
You’re charged interest on your current balance monthly. You can pay your interest every month, use your dividends to offset it, or add it to the loan balance. You can even prepay and lock in a fixed rate.
4. Repaying the loan
Whenever you sell some shares, the proceeds automatically reduce the loan balance. You can also choose to repay some or all of the loan at any time (unless you’ve fixed the loan for a set term), but remember that selling shares may have tax implications.
How much can you borrow?
The amount you borrow depends on how much security you already have, what shares you want to buy, and what level of “gearing” you are comfortable with. (The “gearing level” indicates the proportion of your portfolio made up of borrowed money: if you had a $100,000 portfolio that included a $60,000 loan and $40,000 of your own money, your gearing level would be 60%.) ANZ has an Approved Securities List which contains all the shares you can use as security. Each one has a Loan to Value Ratio (LVR) which is the gearing level ANZ is prepared to allow on an investment in that company. For example, BHP might have an LVR of 75%. This means that if you wanted to hold a portfolio of $100,000 of BHP shares, the loan could make up at most $75,000 of that portfolio. (Of course, from a risk management perspective, you might not want to borrow the maximum amount possible). You can learn more by visiting our website at www.anz.com/shareinvestmentloan or reading our online brochure.
Any questions? Call 1800 639 330
Using your loan to trade through E TRADE
Your ANZ E TRADE Share Investment Loan is seamlessly integrated with the E TRADE Online Investing service.
Integrated Trading
You can trade with your ANZ E TRADE Share Investment Loan through E TRADE’s website, just as you would with a standard E TRADE account. E TRADE’s automated order processing ensures your order is placed to market as quickly as possible*.
Real-time Account Information
Your account balances and positions are updated in real-time, so you should always have current, accurate data to base your decisions on.
Research and Analysis
E TRADE provides one of Australia’s most comprehensive stock analysis databases, with independent experts’ research, company profiles and historical data, news, announcements and unlimited real-time quotes*.
*Subject to system availability
Any questions? Call 1800 639 330
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Advanced Features
Diversification
If your portfolio meets ANZ’s Diversification criteria, you may be able to take advantage of ANZ’s market-leading Diversified Approved Securities List. This lets you use almost twice as many ASX-listed shares as security than you could with a standard ANZ E TRADE Share Investment Loan and offers higher LVRs on many of them. This could substantially increase your security value, letting you choose between greater leverage if you need it to take advantage of market opportunities, or a greater cushion against the risk of a margin call if the market drops. To qualify, you’ll need to hold at least four stocks, and other criteria apply. You can find out more in our online brochure at www.anz.com/shareinvestmentloan.
Be rewarded with Cross-Rewards
If you have a qualifying loan balance or trade actively with E TRADE, you could benefit from our Cross-Rewards: discounted brokerage for eligible loan balances, and reductions in interest rate for active traders.
MONTHLY TRADING WITH E TRADE
SHARE INVESTMENT LOAN WITH ANZ
GREATER THAN 10 TRADES
LOAN BALANCE GREATER THAN $100,000
REWARD: DISCOUNTED BROKERAGE
REWARD: DISCOUNT ON STANDARD VARIABLE INTEREST RATE
You can find out more about these and other features including the terms and conditions on our website, www.anz.com/shareinvestmentloan Any questions? Call 1800 639 330 7
How do I manage the risks?
Like any investment strategy, borrowing to invest does involve some risk. If the value of your portfolio falls, your shares may no longer be worth enough to secure your entire loan. This is called a “margin call”. (To help ensure that small market movements don’t trigger minor margin calls, ANZ allows an extra 5% buffer.) For example, the chart below shows a portfolio with a total value of $100,000 and a security value (the amount ANZ is prepared to lend) of $70,000. The portfolio includes a $65,000 loan. If there is a market fall and the portfolio drops 20% in value to $80,000, the security value will only be $56,000 (70% of $80,000). The loan of $65,000 will exceed the security value, and a margin call will occur. You can see this shortfall on the chart below. The client will need to either reduce the loan balance – by paying some of it back – or increase their security value by contributing more security. This can either be other shares that they own outside the facility, or cash that they deposit into a linked account. In the chart below, you can see how the client adds more shares to their portfolio and increases the security value back up to the level of the loan.
$100K $80K Loan $60K $40K $20K $0K
Portfolio Portfolio Loan Shortfall Loan
Portfolio
Security Value
Original position. Security value is $70K.
Portfolio drops. Margin call occurs.
Security topped up to rectify margin call.
You can read more about managing risks on our website at www.anz.com/shareinvestmentloan and in our online brochure.
Any questions? Call 1800 639 330
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Managing your portfolio
There are a number of strategies you can use to help minimise your risk.
Invest in good-quality shares for the long term
E TRADE gives you powerful tools and independent research to help identify high-quality investments that will retain their value in the long term. You can also consult a financial adviser about selecting appropriate investments.
Borrow conservatively
Simply because you can borrow a certain amount of your portfolio does not mean you should actually borrow the maximum amount possible. Keeping your gearing ratio below the maximum can be a sensible strategy because it gives you an additional cushion if the value of your portfolio falls.
Diversify your portfolio
Diversifying your portfolio across a broad range of shares and industry segments helps reduce the volatility of your investments. If one of your securities performs poorly, it will have a limited impact on your overall portfolio.
Monitor your investments
It’s your responsibility to monitor your investment portfolio carefully. By tracking your portfolio, security value and loan balance you can adjust your gearing to suit market conditions and minimise your exposure if the market drops.
Any questions? Call 1800 639 330
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How do I apply?
Apply online
Applying for an ANZ E TRADE Share Investment Loan is simple with our convenient online application form. You can access the form from our website at www.anz.com/shareinvestmentloan If you need any assistance completing the online application, you can call our Client Services Team on 1800 639 330.
Where can I find out more?
Visit our website
You can find out more about the ANZ E TRADE Share Investment Loan at www.anz.com/shareinvestmentloan
Speak to someone at ANZ
Our Client Services Team can help you with any personal queries. Please call 1800 639 330, 8am-6pm AEST, Monday-Friday (excluding national public holidays).
Post
ANZ E TRADE Share Investment Loan Reply Paid 4338 Melbourne VIC 3001
Email
shareinvestmentloan@anz.com
Fax
1800 186 286
Any questions? Call 1800 639 330
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Important notes
An ANZ E TRADE Share Investment Loan is subject to investment risks, including possible losses in income and invested capital and additional liability for the loan. All responsibility for managing and monitoring investor portfolios resides with the investor. If your loan account is not in order, ANZ may contact you or your authorised representative, but is under no obligation to do so. We recommend that you contact us promptly if you experience financial difficulty while an ANZ client. This brochure does not take into account your personal needs and financial circumstances and you should consider whether any products are appropriate for you. We recommend that you consider professional advice to determine whether a geared portfolio is a suitable wealth management solution for you. Taxation laws are complex and their application varies according to investors’ specific circumstances. We recommend you consult an accountant or taxation adviser to determine how taxation laws apply to you before you apply for a loan. All fees and charges referred to in this brochure are exclusive of GST, except for the Off Market Transfer Fee, which includes GST. You will be liable to reimburse ANZ for all taxes and Government charges where applicable. Please be sure to study the ANZ Margin Lending terms and conditions carefully. They include important information about this product, and tell you about your obligations and other things you need to know. You can visit www.anz.com/shareinvestmentloan to download and read the ANZ Margin Lending terms and conditions. If you have any questions, please call us. ANZ Margin Lending (the department of ANZ that provides the ANZ E TRADE Share Investment Loan) does not provide investment advice. Inclusion of a stock on the ANZ Approved Securities List does not imply that ANZ has a view on that stock as an investment, and qualifying for the Diversified features of an ANZ E TRADE Share Investment Loan is not an indication that your portfolio is appropriately diversified. ANZ recommends that you consider professional advice and ensure that you have read and understood the available product information (including the terms and conditions) before applying for a loan.
Any questions? Call 1800 639 330
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www.anz.com
Australia and New Zealand Banking Group Limited (ANZ) ABN 11 00 37 . ANZ’s colour blue is a trade mark of ANZ. Item No. 913 03.008 W183