Debt recycling – what are your thoughts?

In by Andrew Wilson1 Comment

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Andrew Wilson

Hey guys,

Firstly a big thank you for the content you produce, I have binged from the first episode through to the next top trader episodes at the start of the year in the last 4-5 weeks. I chuck my head phones on when we do our weekly “big” clean of the house and the wife gets annoyed because every few minutes I’ll yell out “EQUITY MAAAAATES!” just to get a rise… hook, line and sinker every time! (what did he learn at 20 by the way?)

I am very new to investing having only taken an interest in the last year (recently turned 30). I started with my super and switched to a 50/50 split of aussie and international shares in January this year… needless to say I fluked the timing and I jumped 9 grand in six months! This got me super keen. So I have been reading everything I can get my hands on, including quite a few of the books mentioned in your podcast. One in particular that resonated with me was Motivated Money by Peter Thornhill. As you may already know he talks about investing for dividend returns and also talks about debt recycling. Below is a link to a simple graph he uses to explain the method he (and I’m sure others) use.

https://www.retireondividends.com/support-files/peter-thornhill-dividend_recycling.pdf

with the current low interest rates this sounds like a viable option as I have a mortgage with about $130,000 in equity and can’t see why I shouldn’t be doing this.

What are your thoughts on debt recycling as a whole and your opinion of my situation?

Also I would be looking at LICs and ETFs that provide decent dividend yields to invest in.

Absolutely NONE of my mates are remotely interested in finance so I have noone to bounce this stuff off!

Keep up the awesome work! It’s a pleasure listening to you! Up the Dons! Alec you can have Daniher mate he never gets on the park anyway!

Cheers,

Andrew Wilson

  • Edit
    Ryan McCormick

    Hey Andrew, I recently bought, and am reading, Peter Thornhill's book https://motivatedmoney.com.au/buy-the-book/ which outlines what you described. I'm in a similar situation as none of my friends/family are even remotely interested in this stuff, so I understand. Debt recycling definitely looks like an interesting strategy, although I feel I'd want to understand it completely, at a high level before I went all in. Which I'm not yet there either.

    Ryan.