How to debt recycle in Australia (step by step) with financial adviser Alex Luck

[@BigLeafDropper86]

the idea of DR is to pay off non-deductable faster using this method, so loan would not be extended, it would be greatly reduced, the extra money at the end 30k should pay off loan not be spent on blow... yes most people mistake DR to leveraging, but this convo doesn't really clear much up at all

[@adamc3616]

You guys did it! You listened to the feedback:) Thanks!

[@payroll970]

Debt recycling is considered a high-risk strategy because you’re using borrowed money to invest in (perhaps shares) and using your own home to secure that debt. When you take out a margin loan banks make margin calls for a reason. If there was no risk why don't the banks just say , don't worry your shares have halved we will not make a margin call they will go up in the long run.

[@ASXStockPicking]

Maybe a 10% cash rate would wipe out your wealth too

[@andreifrolov82]

Where are time codes? Can’t see them

[@davidbragg30]

Does investing in both names have to be @ 50/50 share? Could I invest with 90% ownership in the higher income earners name and 10% in the lower earners name. The investment is in both names but this would have a tax advantage.

[@Rask-invest]

This is a very good question to ask your accountant or tax adviser mate. Otherwise, the ATO community may have an answer. I would want a proper response to that before acting on an answer. Owen

[@michaeledwards5545]

Is the loan only deductible against gains from the investment or can I deduct it from the income from my job?

[@Rask-invest]

Hey mate, I’d refer to the ATO website on this one, or just call your (good) accountant, because my understanding is it comes back to having the genuine purpose of the loan monies and also a sufficient ‘nexus’ to the income generated. I’m imagining a story would help… I feel like I couldn’t log into my NAB account, change the account name to “investment purposes” but then go and buy a Hilux for camping (as much as I’d love that! Haha). There is no genuine purpose for the loan that would make that “investment” deductible (ie it’s not used to pay for income producing assets like shares or a property - the Hilux isn’t producing income directly). This is where paying a good accountant is an awesome resource.

[@jbne9]

Thanks for the video. Might have been good for a example that is more for everyday people.... In this example you have an extra $50k a year to debt recycle. I don't think the average person has that kind of extra money. My guess would be the average person would be doing a one off recycle eg. $100k and try and let that compound in shares? Just my thoughts thinking about my own situation

[@Rask-invest]

Great point mate. Alex mentioned to me before we recorded (and alluded to it in the show) that he used the high salary to provide a ‘more impactful’ version of the numbers. Really, it wouldn’t matter though - just dial the income up or down. On your point re $50k - keep in mind that’s the point of debt recycling. Smaller ‘chunks’, lots of times. And to be honest, my guess is most of the homeowners in the Rask community would have more equity in their property than they realise. Especially if they have a house purchased more than 2 years ago with a decent deposit. For what’s it worth, I’m not really a ‘debt recycler’ but more an ‘equity release’ guy. Just follow the process every 3-4 years to redraw equity. Bigger chunks, and less effective in the long run. But less admin haha

[@patobrian-i8i]

Not one of your best Owen. Too complicated for most people. KISS principle comes to mind. Pay off home, Super and if younger- VAS IVV

[@Rask-invest]

Thanks mate! Love the feedback. I agree - not simple. Maybe a 7/10 or 8/10 difficulty in terms of complexity for personal finance. So I was apprehensive about it, especially on our Finance podcast (beginner m-intermediate). However, 3-6 months ago I shared what my wife and I was doing on the Property show with our equity. It got the biggest downloads of 2024. Then I wrote about it in our newsletter. Huge engagement! Now we’ve done the podcast - and more Raskles than ever before have reached out for advice - which is a good thing - since they now get the value component. Since this went out I’ve been approached by other advisers who are so happy someone finally talked about it in a professional way. One of my favourite financial planners in Australia told me ‘in the last 7 years, on paper, every individual or couple on a consistent salary who wanted to retire early, was recommended to use debt recycling’. Once someone understands the (pretty straight forward) math, it is a no brainer - IF you want to retire early. If someone doesn’t want to retire early, wants to pay more in interest (on a loan) and/tax (on investments) then buying cash is totally fine - and an amazing thing to do. That’s not a knock on using cash to buy shares, but *on paper* it’s an absolute no brainer. And I felt I would be doing our 100,000+ listeners of the Finance podcast a disservice by not providing a good, valid, expert opinion on the subject. Hope that helps. Owen VAS/IVV for the WIN! But in my view mate, KISS applies only so far. Sometimes it does make sense to break the rule. I hope that it came across how cautious I was, but always why and how it made sense.

[@Ballba365]

Disagree, this strategy exists and is being used, so why not cover it. The risks and opportunities were clearly communicated. I felt this was too high level and not detailed enough if anything.

[@BigLeafDropper86]

is this guy a financial advisors? its still unclear

[@leonie563]

Not sure? Asic cancels everest asset management afs licence (ASIC gov au, 2024)

[@kitkat3501]

​@leonie563 this guy is from Everest Wealth and based in WA so a totally different business