Debt Recycling The Pearler Template

Debt recycling is a strategy where you use the equity in your home to invest in income-producing assets, typically to create a tax-effective structure. The income generated from these investments can then be used to pay down non-deductible debt (like your home loan) more quickly. For this strategy to be effective, it’s crucial that the investments you choose generate sufficient income, often in the form of dividends.

To determine whether the assets in the Pearler template generate income through dividends, you would need to look at each specific asset’s historical dividend yield and payout frequency. Generally, income-generating assets include dividend-paying stocks, real estate investment trusts (REITs), and certain types of bonds or fixed-income securities.

When selecting assets for a debt recycling strategy, consider the following:

1. Dividend Yield: This is the percentage of the stock price that is paid out in dividends each year. Higher dividend yields are typically more attractive for income-focused strategies.

2. Dividend Stability and Growth: Look for companies with a history of stable and preferably growing dividends. This indicates financial health and a commitment to returning value to shareholders.

3. Sector and Market Conditions: Some sectors like utilities, telecommunications, and consumer staples are known for higher dividend yields and stability. However, market conditions can affect these sectors differently.

4. Tax Considerations: Since dividends can be taxed, it’s important to understand the tax implications of your investments. Some countries offer tax advantages for dividends under certain conditions.

Pearler offers tools that can assist in managing and selecting dividend-paying assets. For instance, you can set up a Dividend Reinvestment Plan (DRP) directly through share registries or use Pearler’s Autoinvest feature to automatical

Show more.....

Hi Tim,

As far as I can tell, the ETFs in the Pearler templates do each pay dividends/distributions, so this should be perfectly fine.

To double check, look up each ETF separately and go to its website and then find the section on distributions. As long as it says that it has paid out income in the last 1-2 years, then it’s fair to deem it an income producing asset for the purpose of debt recycling.

Hope that helps.
Dave