Equity investment returns - what to do with them

Discussion in 'Share Investing Strategies, Theories & Education' started by nitro-nige, 18th Jul, 2007.

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  1. nitro-nige

    nitro-nige Active Member

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    2nd Jul, 2015
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    Location:
    Melbourne
    My wife and I are looking at buying our first PPOR 'gulp'.
    I'd like to use the equity in the house as we pay it off to fund other investments.
    My question is what's the best tactic for the returns from the investment.
    Should we;
    - reinvest the money directly/take dividends (for example) as extra shares etc
    - put the money into the mortgage to reduce the principle and redraw against it
    - use an option I haven't thought of?
     
    nitro-nige, 18th Jul, 2007
    #1
  2. Glebe

    Glebe Well-Known Member

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    You're probably best off performing the art of debt recycling.

    It's been mentioned here quite often.

    This involves paying off your non-deductible debt as quick as possible, whilst borrowing against your equity to fund other investments, which in turn pay down your PPOR debt. And like a rolling stone, it gathers momentum then before you know it you're non-deductible debt free :)
     
    Glebe, 18th Jul, 2007
    #2
  3. MichaelW

    MichaelW Well-Known Member

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    Yep, worked for me! ;)

    The question then becomes: What to do with your equity when you've got no PPOR mortgage left? But I think I know the answer to that one too...

    Mind you, in the current environment I'm holding it in reserve and just using my surplus cash flow to reduce my LVR. Sometimes the sideline is a nice place to be too.

    Cheers,
    Michael.
     
    MichaelW, 19th Jul, 2007
    #3
  4. spider

    spider Well-Known Member

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    apportioning debt

    How do investors apportion their debt on their PPOR. Do you have sub accounts for the deductible vs non deductible debt?

    thanks
     
    spider, 19th Jul, 2007
    #4
  5. DaveA__

    DaveA__ Well-Known Member

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    theres the products like the st george portfolio around which this is great for, but im interest to hear what others use which i imagine would be quite similar (maybe a bit cheaper...)
     
    DaveA__, 19th Jul, 2007
    #5
  6. spider

    spider Well-Known Member

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    Recycling debt


    Yeah. me too
     
    spider, 19th Jul, 2007
    #6
  7. Simon Hampel

    Simon Hampel Founder Staff Member

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    Most lenders will allow you to set up multiple loan accounts, mainly when refinancing - they will allow you to set up a new account to access the increased equity (from growth and/or loan principal payments). The idea would be to use this new facility only for investment purposes and have it extended down the track when you have more equity (or have paid off more from the base loan).
     
    Simon Hampel, 19th Jul, 2007
    #7
  8. DaveA__

    DaveA__ Well-Known Member

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    yeh but someone who will only have one loan for the near future (until capital growth) thats y im so attracted to the portfolio loans...

    one of the only products i know that will allow me to effectively debt recycle until i get an IP...
     
    DaveA__, 19th Jul, 2007
    #8