Debt strategies
Debt is a tool. Like any tool, the outcome depends on how deliberately it is used
Not all debt is the same
Debt tends to be treated as a single thing to be minimised, when in reality its structure, purpose and tax treatment matter as much as the balance. The order in which debts are repaid, and whether repayment is the best use of a dollar at all, are strategic questions rather than obvious ones.
The distinction between deductible and non-deductible debt is often where the most ground is made up. So is the simple question of whether surplus should go toward the mortgage, into superannuation, or into an investment — a question with no universal answer.
As retirement approaches, debt moves from being a question of efficiency to a question of security, and the strategy usually changes with it.
What a debt strategy considers
- The structure, rate and purpose of your existing debt
- Which debts to prioritise and in what order
- The difference between deductible and non-deductible debt
- Weighing additional repayments against investing the same amount
- Using offset accounts and redraw facilities appropriately
- Planning debt reduction in the years approaching retirement
Working with your lender or broker
We do not arrange loans. Where a change to your lending would support the strategy, we will say so and work alongside your broker or lender so the pieces fit together.
Borrowing to invest magnifies both gains and losses, and is not appropriate for everyone. Where it is considered at all, it is modelled carefully and discussed plainly before anything is recommended.
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The information on this page is general in nature and does not take your objectives, financial situation or needs into account. Consider its appropriateness to your circumstances and read our Financial Services Guide before acting on it.
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