Chris Bates
speaker
1,659 appearances
5 recordings
1 series
first heard Jun 2021
last heard Dec 2022
Chris Bates’s voice in public audio — every appearance, attributed to the second.
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Appearances
So I do caution people looking at debt recycling.
The idea behind debt recycling is you borrow using equity in your home loan, which is kind of what we spoke about.
You buy assets.
And as those assets go up, you sell those.
So you buy, let's say you do $100,000 of equity.
You buy some shares.
As those shares go to $150,000,
You sell those shares, pay off your home loan $150,000 and now it's off $50,000 less and then you re-borrow and buy more shares.
And so this is what the recycling is.
You buy some assets, they grow, you sell them, you pay off your home loan, you re-borrow, you buy shares.
I just don't think that sort of mindset works with share investing.
You know, it's very short term and then you have to pay capital gains tax.
So I don't really like debt recycling as a strategy.
I think if you're going to pay your mortgage off, the main way to do that is what we spoke about,
paying a lot more than the monthly repayment and making sure you're getting the sharpest rate you can because they're the two controllables if and using an offset account um going you know staying you know disciplined setting as you get pay rises keep improving your your amount if you want to do other investing that's a different conversation you pull equity out and you invest long term you know and you invest longer than 10 years ideally 15 20 years
The longer, the better.
And you use that equity for that reason, not to sort of pay your mortgage off faster.
Use equity to buy investments for your longer term future.
Don't use it to pay off your mortgage.
I just don't think it's a great strategy.
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