What is debt recycling?

Debt recycling is a financial strategy that can help you create wealth for your future by replacing your home loan (non deductible) debt with investment (tax deductible) debt over time. It enables you to:

  • Repay your home loan quicker saving large amounts of interest
  • Build wealth in an investment portfolio outside of superannuation
  • Increase your tax deductions each year saving you tax

Debt recycling is a long term strategy that can help you achieve your retirement income goal. Debt recycling can provide an alternative to superannuation by allowing you to accumulate wealth in the non-superannuation environment which provides access to funds in the future if required. This may be appropriate if you are looking to retire prior to your preservation age (the age you can get access to your superannuation benefits).

Debt recycling simply uses your existing home loan repayments more efficiently to get a better result through interest savings, tax savings and long term wealth creation.

Who can benefit & what are the benefits?

Anyone who has a home loan and would like to pay it off in the quickest possible time, reduce tax and create wealth all at the same time.

A debt recycling strategy can be customised to your individual situation, and incorporated with other financial planning strategies as appropriate. After all, you have to pay your home loan repayments anyway, why not use that money more effectively to get a better result?

Benefits to this strategy

  • Commences the wealth creation process immediately, allowing for longer term growth of the investments.
  • Replaces bad (non deductible) debt with good (tax deductible) debt
  • Helps you reach your wealth accumulation goals sooner
  • Provides a diversified investment portfolio outside the home
  • Tax deductions can be claimed on the interest paid into investment loans.
  • Maintain access to your investment funds (if required)
  • Potential for future growth in a down investment market

Need advice with a debt recycling strategy?

As everyone’s situation is different and people have different financial needs, it is important to seek professional financial advice before implementing a debt recycling strategy.
With all financial strategies there are risks that need to be considered. A professional financial adviser can ensure that your strategy is tailored for your individual circumstances to make sure that a debt recycling strategy is appropriate for you.
Contact us today to discuss your future wealth accumulation opportunities.