Debt Management
At Rocket Wealth Management, we can work with you to identify
potential savings from existing debt, or create a budget to assist with cash flow problems.
Are you finding it
difficult to reduce
your debt?
Australians on average have some of the highest levels of debt in the world.
- Bank overdrafts
- Bank loans
- Benefit overpayments
- Catalogue debts
- Council tax arrears
- Credit and store cards
- Friends and family debt
- Energy debt
Many people don’t have a budget in place or don’t realise they could be benefiting from strategies which reduce debt more quickly, resulting in large savings over the remainder of the loan. At Rocket Wealth Management, we can work with you to identify potential savings from existing debt, or create a budget to assist in cash flow problems.
Debt management is an individual process for everyone. There are many factors which need to be considered, such as existing debt, disposable income, interest rates, or unexpected events.
Our services will provide you with a strategy and structure to assist you in achieving your financial goals.
Should you borrow to invest?
Borrowing to invest can allow you to invest in assets you wouldn’t otherwise have been able to. It can help spread your money across different investment types, which can help reduce risk. This greater exposure gives you the potential to magnify your returns, but can also magnify your losses. If you have built up equity in your home or investment portfolio, you may be able to borrow against this equity.
Margin Loans
You could also take out special investment loans – often called margin loans. You can also borrow a lump sum with regular amounts to add to your investment – known as instalment gearing. Since the interest costs are usually tax deductible, gearing can be a tax-effective strategy. With margin loans, lenders allow a maximum gearing level known as the debt to asset ratio. You might have to offer more security or even sell some of your asset holdings at current prices to bring your gearing down to the right level.
Approach
Retirees should consider how comfortable they are taking on more debt or focus on eliminating their debt. Margin loans should only be considered by investors who are comfortable with an above-average level of risk. As any investment professional will explain, an opportunity should not be considered for its tax effectiveness. It needs to be measured by how strong the underlying asset is, and its potential for growth. Tax-effectiveness is a method which helps improve investment viability – it should not drive the decision. For more information about how Rocket Wealth can guide you through various ways to minimise debt, contact us today.