I just saw a financial adviser (He is a reputable adviser recommended by my work colleagues) - advised me to pay down all the non-deductible debt (ppor) first before investing anything (ip/shares/anything basically). while it makes some sense to pay off the non-deductible debt to reduce the interest incurred, I am not entirely sure its the best approach. I wonder how many people here had paid off ppor prior to buying ips….
I think you should see someone else. If we had waited to pay off our non-deductible debt before investing, we would have a house to live in and nothing else.
Stay away from Financial advisors. ( I know some know their stuff but in general, NO). IMO the advise he gave you was quite poor if he didn't ask you 1. Did he ask your financial goals, 2. risk profile? 3. Current financial situation? You need a good Mortgage Broker! Mortgage broker Mortgage broker Mortgage broker This is a huge deal to me because someone who is trying to change their life and build real wealth can get massively derailed by many Financial planners....This is a huge deal.
@samiam Was this "advice" provided in a "free initial consult"? If so, the person is going to be very limited in what they can say without knowing your full circumstances. The Y-man
I was given the same advice by an accountant. Told me to pay down ppor or put everything into off-set (if turning ppor into rental in the future). I took the advice, now down to last $30k, have LoC in place for deposits and pre-approved for investment. I agree with Wylie though, just get ppor under control and then start investing. I've only paid so much off my ppor because I've spent so long making offers but not getting anything over the line on the investment front
I don't think @wylie is saying that. I think what she is saying in polite terms is 'run away from this guy' and get much better advice, or risk having no portfolio.
Sounds like a gross generalisation, rule of thumb type thing, just like: don't stick the butter knife in the toaster!
We need wylie to adjudicate on this one! In general, paying down your ppor before investing isn't bad advice. It's just difficult to do because some people have such large mortgages it would take years to even get started with investing and they could lose out on many opportunities. Getting your ppor loan at least under control so you have cash flow buffer if the investment goes sour or hits a rocky patch is good advice for most people (it was for my circumstances at the time).
I would say you've got a very conservative advisor - in this case you can have your cake and eat it too. Yes - reduce non-deductible debt BUT recycle that debt into investment debt as quickly as you can. As soon as you have enough equity through saving and growth in your PPOR for a deposit, buy an IP. I come across this quite a lot, as @wylie said if you wait too long you'll have nothing except a paid off house and a whole lot of missed opportunity.
Paying down non deductible debt before deductible is a good idea - it makes a lot of sense. However - paying off all non deductible debt before investing in anything doesn't sound reasonable. For most people - that would mean waiting 15 - 30 years before investing. Cheers Jamie
Agree mate.That's why I said it was quite poor advice. Would kill most peoples dreams of building wealth.
He's given great advice.... .... for 95% of the population that suffers from bias #20. If you want to be like that 95% then take his advice. Otherwise, ditch him, take some risks & be your own financial adviser.
This is exactly what I meant. If that is what your advisor was suggesting, then I would say he is too conservative and I would not be taking his advice.
Thanks all. I find this forum very helpful. @keithj I must admit, I still suffers from bias to some extent (and having analysis paralysis) but I am ready to take some risks and work hard to get my goal of financial independence. Sorry, this thread should be under general chat.
