Q&A: Interest-only loans, transferring investment ownership, education bonds and more...

Apr 28, 2025

Stuart dives into crucial property investing insights, such as what to do when interest-only loan terms end—refinance or switch? He explores effective debt strategies as retirement approaches and outlines exit plans for property investors. A listener questions whether to transfer ETFs into a family trust, prompting a discussion around capital gains tax impacts. Stuart also evaluates education bonds for saving on school fees, highlighting their pros and cons. Additionally, he explains the unique land value growth for units versus houses, making complex topics accessible.

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ADVICE

Manage Interest-Only With Offset Liquidity

If your interest-only term ends, keep the loan interest-only for the life of that property unless your retirement horizon requires change.
Move cash into an offset rather than making immediate principal repayments to preserve liquidity and flexibility.

ADVICE

Aim For Moderate Gearing By Retirement

Target a conservative loan-to-value ratio by retirement, roughly 30–40% LVR, not zero debt.
Start increasing offset balances and reducing gearing around 20 years from retirement for flexibility.

ADVICE

Use Trusts And A Corporate Beneficiary Correctly

When investing from family trust income, invest via the family trust; when investing from business income, use a corporate beneficiary.
Ensure company shares are owned by the family trust so future dividends flow back into the trust for distribution flexibility.

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In yesterday’s Q&A podcast episode, Stuart answered a wide range of listener questions about property investing, tax strategies, and long-term financial planning. He explained options for investors whose interest-only loan terms are ending, covering whether refinancing or switching to principal and interest repayments makes more sense depending on personal strategy. He also discussed the timing of paying down investment loans and different exit strategies for property investors.

Another listener sought advice on structuring future ETF investments and whether it is worthwhile to transfer an existing portfolio into a family trust. Stuart broke down the key factors to consider, including capital gains tax implications and long-term flexibility.

For those planning education funding, Stuart addressed whether education bonds are an efficient way to save for private school fees compared to a regular share portfolio, and the pros and cons of setting up one bond per child versus one combined bond.

The episode also covered the nuances of land value growth for units versus houses, and how to think about the land-to-asset ratio when assessing long-term investment prospects.

Finally, Stuart reviewed a detailed family financial plan involving superannuation consolidation, wrap platforms, education bonds, and SMSF management, offering broad principles to help guide listeners facing similar decisions.

As referenced during the episode, you can also listen to Don’t Wait Until It’s Too Late – Strategic Retirement Planning here.

Do you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts

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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.