For you and your wealth.
Debt Management
Debt is not a dirty word. Or at least, it doesn’t need to be.
How you feel about debt often comes down to one thing: are you in control of it, or does it feel like it’s running the show? When managed well, debt can help you achieve major life goals, like buying a home or growing long-term wealth. But just because you can take on debt doesn’t always mean you should. Our role is to help you stay firmly in the driver’s seat, making sure every loan, repayment, and strategy works in service of your future goals.
Effective debt management isn’t only about the interest you pay. It’s also about understanding the assets you’re investing in, the type of debt you hold, and which repayments should be prioritised. Most personal debt falls into two simple categories:
Inefficient debt
Efficient debt
Debt Management and Cashflow FAQs
Whether you're reducing debt, restructuring it, or exploring investment options, these FAQs give you clear, simple answers to the questions we hear most often.
What Is Inefficient Debt?
Inefficient debt is used to purchase goods, services, or assets that don’t generate income. Because they don’t produce cash flow, you must rely entirely on your own income and savings to repay them. To make things even more expensive, the interest on this type of debt is not tax deductible.
Common examples include home loans, credit cards, and personal loans. While these types of debt are often unavoidable, they can limit other wealth-building opportunities. Generally, it’s best to reduce inefficient debt as quickly as possible, starting with those carrying the highest interest rates. Strategies like consolidating multiple debts into a lower-interest loan can also make repayment more manageable.
What Is Efficient Debt?
Efficient debt is used to purchase assets that have the potential to grow in value and generate an income. This type of debt can benefit you in two key ways:
Income from the asset can help repay the loan
The interest may be tax deductible, reducing your overall tax burden
Common examples include investment property loans, investment loans, and business loans. While efficient debt can be a powerful wealth-building tool, it still comes with costs. Every dollar spent on repayments is a dollar that could have been used elsewhere. We help you determine whether your debt structure truly supports your financial strategy and long-term goals.
Should You Borrow to Invest?
What are margin loans and how do they work?
Borrowing to invest (also known as gearing) allows investors to access opportunities that might otherwise be out of reach. It can help diversify a portfolio, which may reduce certain types of risk. Gearing has the potential to magnify returns, but it can also magnify losses, so it’s important to understand both sides.
In some cases, if you’ve built equity in your home or investment portfolio, you may be able to borrow against that equity to access additional investment options. This is general information only and does not consider your personal situation.
Margin loans are a type of investment loan that let you borrow money to purchase assets like shares or managed funds. You can borrow a single lump sum, or add smaller, regular amounts over time, often called instalment gearing. Because interest costs on margin loans are usually tax deductible, gearing can be a tax‑effective strategy, although this depends entirely on individual circumstances.
Margin loans also come with a maximum gearing limit known as the loan to value ratio (LVR). This ratio compares how much you’ve borrowed to the value of the investments you’ve offered as security. If markets fall and the value of those investments drops, your LVR can rise. If it moves above the lender’s allowable limit, they may issue a margin call. This means you may need to add more funds, provide additional security, or sell some investments at short notice to bring the LVR back in line.
This is why gearing can magnify both positive and negative outcomes. Understanding the risks involved, and how comfortable you are with them, is an important part of deciding whether a margin loan fits into your overall strategy.
Our Approach
Debt looks different for everyone, especially in retirement. Some people feel more comfortable reducing or clearing debt, while others may explore using it strategically depending on their goals and tolerance for risk. There is no one size fits all answer here.
Margin loans involve higher levels of risk and tend to suit investors who understand how gearing works and are comfortable with the potential ups and downs. And while tax benefits can be helpful, they are only one piece of the puzzle. The quality of the underlying investment matters far more. Think of tax effectiveness as the seasoning, not the whole meal.
If you would like clarity around your options, the ACru Wealth team can help you understand what is possible and explore strategies that align with your circumstances. This is general information only and does not take your personal situation into account.
Explore how we support your overall financial strategy through our full range of services.