Joobles Posted September 19, 2016 Share Posted September 19, 2016 Hi there My husband and I are in the fortunate position of being able to save quite a bit every month and it's currently just sitting in an ING savings account. I'm wondering if we should start to make additional super contributions - especially as we are 40 and have only starting paying super in the last 2 years. Does this make good financial sense or should I be looking at some other type of investment? I'm a bit unsure of the options here - in the UK I'd have been opting for ISAs and overpaying on my mortgage (we rent here but still have 2 properties in the U.K.). Many thanks for any advice. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 19, 2016 Share Posted September 19, 2016 I would certainly boost super contributions if a lot to spare. Personally done so for many years. There was a time when lost money as well though so be warned ,when shares fell. The rule is to diverse. I'd still keep a handy amount in the bank. Then there is different currencies and preferred investment portfolio's. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 19, 2016 Share Posted September 19, 2016 I would certainly put some of it in your super. The downside is that once you've paid it in, you can't get it out again until you retire - BUT as I'm discovering now, it's not a bad thing to have a nest egg when you get to that age!! The major advantage of paying it into super is that you can then claim a post-tax contribution, which will offset some of your income tax. You can contribute up to $30,000 each, every year. It's easy to pay it into super, then ask the super fund for the form to claim. Fill in the form and give a copy to your accountant when it comes to tax time. For the future, you could tell your work to pay more money into your super each month. They will then calculate your income tax AFTER they've deducted that money, which will mean you pay less tax. There is no point in the money sitting in a savings account as you'll get very little interest and you'll pay tax on the interest too. The other option is to overpay on the mortgage. That won't have any tax advantages and in fact, if your properties are rented out, it may have tax disadvantages as you'll end up paying less interest on the mortgage and therefore have less of a deduction to claim. However, it could still be worth it because you're shortening the life of the mortgage (sometimes dramatically because of the power of compound interest) and the good thing is that you can access that money at any time by doing a redraw or selling the properties, unlike super. By they way, I hope you got depreciation reports on the properties when you first rented them out, and that you've got an accountant who knows both British and Australian tax to be sure you're getting your maximum deductions on them (if not, there are a couple of good ones on these forums). Quote Link to comment Share on other sites More sharing options...
Keith and Linda Posted September 19, 2016 Share Posted September 19, 2016 I would certainly boost super contributions if a lot to spare. Personally done so for many years. There was a time when lost money as well though so be warned ,when shares fell. The rule is to diverse. I'd still keep a handy amount in the bank. Then there is different currencies and preferred investment portfolio's. This seems a total reverse of your previous view of super:confused: thought you advised that super was only good for the rich! sorry forgot you changed this changed to well off people, it was full of faults and the rules would change to make it almost a worthless system. Quote Link to comment Share on other sites More sharing options...
Eera Posted September 19, 2016 Share Posted September 19, 2016 Super is taxed at a lower rate than your savings are, if you crunch the numbers you'll find you can make extra repayments through salary sacrifice with it not costing you a heap due to the difference in tax. Quote Link to comment Share on other sites More sharing options...
Keith and Linda Posted September 19, 2016 Share Posted September 19, 2016 Hi there My husband and I are in the fortunate position of being able to save quite a bit every month and it's currently just sitting in an ING savings account. I'm wondering if we should start to make additional super contributions - especially as we are 40 and have only starting paying super in the last 2 years. Does this make good financial sense or should I be looking at some other type of investment? I'm a bit unsure of the options here - in the UK I'd have been opting for ISAs and overpaying on my mortgage (we rent here but still have 2 properties in the U.K.). Many thanks for any advice. Salary sacrifice if not already doing so should be your first move, it has advantageous tax benefits or simply put the taxman also contributes into the super too. Interest gained on most super funds is greater than mortgage interest charged which would indicate that super rather than mortgage would be the better route, but then who can accurately predict the share market? history over the longer term would give some indication. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 19, 2016 Share Posted September 19, 2016 This seems a total reverse of your previous view of super:confused: thought you advised that super was only good for the rich! sorry forgot you changed this changed to well off people, it was full of faults and the rules would change to make it almost a worthless system. It is no reversal. I am afraid you did not understand what I was saying. That being of course it favours the more well off as a vehicle to park a considerable amount of money with little impost. Not to say withdraw it long before retirement age to use at will. Of course the lesser well of like myself can do the same and ensure get a Aged Pension as well. This being the reason it is unsustainable over the longer term. I also doubt at some stage if the government will not be looking at ways of getting their hands on the money. How the situation will be when many retire will more than likely be up for grabs. While social conservatism can be slow to change in Australia, fiscal things are far less so. Anyway while adding to my personal super, I'd be looking at other options as well. Including cash deposits. I did name a few options. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 19, 2016 Share Posted September 19, 2016 Salary sacrifice if not already doing so should be your first move, it has advantageous tax benefits or simply put the taxman also contributes into the super too. Interest gained on most super funds is greater than mortgage interest charged which would indicate that super rather than mortgage would be the better route, but then who can accurately predict the share market? history over the longer term would give some indication. Yes. As I noted though for a couple of years running, even with pumping up super payments, I was coming out with negative indeed regressive end of year totals. Can be a little heartbreaking to say the least. It should be noted that returns on super are expected to be considerably less than previous years. Quote Link to comment Share on other sites More sharing options...
Parley Posted September 19, 2016 Share Posted September 19, 2016 It depends though on whether you want to buy a home to live in in Australia. Super is great for the reasons mentioned but not at the expense of owning your own home. Quote Link to comment Share on other sites More sharing options...
Guest Posted September 19, 2016 Share Posted September 19, 2016 Could be worth using your money and buying some shares paying fully franked dividends rather than locking the money away in super. Or do a mix of both. Quote Link to comment Share on other sites More sharing options...
Joobles Posted September 19, 2016 Author Share Posted September 19, 2016 Thanks everyone for your replies. I think we will start salary sacrifice but keep the savings we have currently in the bank and keep adding to it. We'd love to own a house here but it feels out of reach at the moment. Quote Link to comment Share on other sites More sharing options...
Andrew from Vista Financial Posted September 21, 2016 Share Posted September 21, 2016 Hello It really will depend on your individual circumstances and there have been some great considerations given by others throughout this thread. Perhaps arrange to see a financial planner to help you with this decision. One thing re your last post though...............you say that you would love to buy a home here but it seems out of reach, in this case why not look to invest into something that will be accessible for the purposes of using it as a deposit at some stage rather then tying it up? You will be aware I am sure but if a person pays into superannuation then it typically will not be accessible until at least retirement (for you this could be 20+ years). Regards Andy Quote Link to comment Share on other sites More sharing options...
Joobles Posted September 21, 2016 Author Share Posted September 21, 2016 Thanks Andrew, that is a good point however I think whether we buy or not we will still need more for our retirement and the amount I'm planning to pay in every month is not going to make a big difference to a deposit! If we do want to buy I think we will need to sell in the U.K. -just not sure I'm ready for that! Quote Link to comment Share on other sites More sharing options...
Gbye grey sky Posted September 21, 2016 Share Posted September 21, 2016 Thanks Andrew, that is a good point however I think whether we buy or not we will still need more for our retirement and the amount I'm planning to pay in every month is not going to make a big difference to a deposit! If we do want to buy I think we will need to sell in the U.K. -just not sure I'm ready for that! You have two properties in the UK but reluctant to sell there and buy here. Does this mean you do not expect to stay and retire in Oz and if it does then I wonder whether additional Super contributions is your best option. Quote Link to comment Share on other sites More sharing options...
Joobles Posted September 21, 2016 Author Share Posted September 21, 2016 Also a good point, guess I'm just hedging my bets! It's not that I don't expect to retire here, I can't say for certain we will. The UK properties - or at least one of them should have capital growth at least and it wouldn't be a good time to bring pounds over so I don't want to sell right now anyway. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 22, 2016 Share Posted September 22, 2016 You have two properties in the UK but reluctant to sell there and buy here. Does this mean you do not expect to stay and retire in Oz and if it does then I wonder whether additional Super contributions is your best option. Super would still be a good option as it can be paid regardless of which country you're in. Quote Link to comment Share on other sites More sharing options...
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