Supercharged Super
Geared Super Strategy on the Northern Beaches
Use gearing inside super to increase long term growth through a structured and disciplined investment approach.
A geared super strategy involves using borrowing inside super to increase exposure to growth assets over the long term.
Rather than relying solely on standard investment options, this approach allows you to invest more than your current balance, which can amplify both returns and volatility.
The objective is to accelerate long term growth, while maintaining a structured and disciplined investment approach.
Importantly, this is designed for long timeframes and is typically suited to investors who are comfortable with market movements and short term fluctuations.
What is a geared super strategy
A geared super strategy involves using borrowing inside super to increase exposure to growth assets over the long term.
Rather than relying solely on standard investment options, this approach allows you to invest more than your current balance, which can amplify both returns and volatility.
The objective is to accelerate long term growth, while maintaining a structured and disciplined investment approach.
Importantly, this is designed for long timeframes and is typically suited to investors who are comfortable with market movements and short term fluctuations.
Increased exposure to growth assets ✔
Designed for long-term timeframes ✔
Uses gearing inside super ✔
Higher potential returns with higher volatility ✔
How a geared super strategy works in practice
A geared super strategy works by increasing your exposure to growth assets within your super.
Rather than borrowing directly yourself, this is typically done by investing in geared investment options that already use borrowing within the fund structure.
This means you are gaining the benefit of gearing without needing to establish or manage a loan personally.
Over time, as contributions and investment returns flow through, the strategy builds exposure to growth assets within a structured framework.
Importantly, this approach increases both potential returns and volatility, and is designed for long term investors who can stay committed through market cycles.
1) Use geared investment options
Invest in super options that apply gearing within the fund structure
2) Increase exposure to growth assets
Gain greater exposure to equities and growth investments over time
3) Stay invested through market cycles
Maintain the strategy through both positive and negative market periods
4) Build over the long term
Allow compounding and contributions to drive long term outcomes
This approach requires discipline and a long term mindset, as returns can be more volatile in the short term.
A simple example of how geared funds work
To make this more practical, here is a simplified example of how a debt recycling strategy may be structured over time.
John is 40 with a super balance of $200,000 and contributes $15,000 per year.
We compare two approaches over 20 years to age 60.
Option A
Standard high growth strategy
Assumed return: 6.4% p.a.
Outcome at 60: approximately $1.27 million
Option B
Supercharged (geared) strategy
Assumed return: 7.6% p.a.
Outcome at 60: approximately $1.52 million
That’s a difference of approximately $250,000 over time.
The difference comes from higher exposure to growth assets over time.
However, the supercharged approach will experience greater volatility along the way, with more pronounced ups and downs during market movements.
What does this mean?
In this example, John hasn’t had to contribute more or change anything day to day to achieve this difference.
The outcome comes from how his super is structured and invested over time.
That additional growth can create more flexibility in the future.
It could mean the option to retire earlier ✔
A higher income in retirement ✔
More support for children or family ✔
Paying down debt sooner ✔
Or having the flexibility to upgrade or change lifestyle in retirement ✔
What this looks like over time
Over time, the difference between the two approaches becomes more noticeable.
The higher exposure to growth assets can lead to stronger long term outcomes, but the path will not be smooth.
There will be periods where the geared approach underperforms, particularly during market downturns.
However, for investors who remain disciplined and stay invested, the long term impact of compounding and higher expected returns can be meaningful.
Is this approach right for you
This approach is not suitable for everyone.
It may be appropriate if:
You have a long term investment horizon ✔
You are comfortable with market volatility ✔
You have consistent contributions into super ✔
You are focused on long term growth over short term stability ✔
The key is ensuring the strategy is structured in a way that you can maintain over time.
Start with a structured approach
The first step is understanding how this approach would apply to your situation and how it fits into your broader financial plan.
From there, we can map out the structure and next steps.
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