BALANCING INVESTMENT OPTIONS TO SECURE YOUR FINANCIAL FUTURE
If you’re paying off your home loan but you also understand the importance of building up your super, you may find yourself trying to balance your present needs with those you’ll have in your future.
PROS OF INVESTING IN SUPER
Superannuation is one of the most tax-effective ways to save. Depending on your age, it can be wise to channel as much money as possible into Superannuation.
If you plan to retire in the next 10 or more years, with more money in super you have the potential to benefit from compound interest and dollar-cost averaging: two of the most powerful ways to build long-term wealth.
Salary sacrifice works much the same way. You can contribute money from your gross wage into super which means less tax is applied to your income. There is a limit on how much you can deposit each year via this method.
PROS OF INVESTING IN PROPERTY
Buying can be an important investment too. However, because of property price rises, many people are finding property is becoming less accessible. This is significantly changing the Australian way of life.
If you are already paying off a home then this can be a good thing, depending on how long you have before retirement. You can end up building enough capital growth to help you in retirement. By putting extra into your home loan, you’ll also pay less in interest charges as the principal amount owed on your home loan decreases.
We also generally expect the value of most homes to rise over time, therefore the more you repay, the more equity you may be able to build.
When it comes to property, you generally have to use after-tax dollars to repay your home loan. But in super you can deposit pre-tax dollars, often with minimal or no impact on your take-home pay packet.
What’s the answer?
There is no right or wrong answer. The way you prioritise will be unique for you depending on your own circumstances, your current super balance, income, needs and goals.
That’s where financial advice can make a big difference. We can show you the specific pros and cons for your individual circumstances. You may not need to choose one option over the other. You may be able to have the best of both worlds. https://amandamccall.com.au/contact-financial-services-brisbane