1. Concentrate on paying off your home loan sooner. In current economic conditions there is no point tucking savings away in a bank account if you have a mortgage at a much higher interest rate. Many people are paying 5.5 percent interest on their home loans, while savings in a bank account will bring you 3 – 4 percent interest max. Don’t forget, you will then have to pay tax on this interest which could potentially bring your return on bank savings down to around the 2 percent mark.
When you have some free time grab a coffee and find a good online calculator that shows you the incredible savings on interest that can be made just by making an extra $100 per week repayment on your home loan.
2. Salary sacrifice into superannuation. This is where you ask your employer to put a portion of your salary as a contribution into your superannuation fund. The contribution will be made from before tax money, and will be taxed at a special rate of 15 percent in your superannuation fund. Therefore, instead of getting taxed at your normal marginal tax rate – which for the average Australian is around 34 percent – you will be taxed at 15 percent thereby saving tax and also saving for your retirement at the same time.
Note that this strategy will not work if your salary is too low, so it is best to check with your accountant about the benefits to you and your particular circumstances.
3. Invest in property for the long haul. Note here that I mention the word LONG in big capital letters. Property is still a great way to save for your retirement if held for long term gain, and it can certainly hold some great tax benefits if structured the right way.
4. My number four tip is possibly the most obvious, yet not used nearly enough. Speak to a financial planner and accountant. It is never too early to become educated on saving for your retirement and the associated tax strategies. Financial planners are not nearly as expensive and scary as you think. My recommendation is to find an accountant and financial planner that have an association with each other so they can work together as a team to provide you with the best possible outcome for your financial future.
This information, facts, insights and ideas (“Content”) are for general informational purposes only and nothing contained in it is or is intended to be, construed as advice. It does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon or treated as a substitute for specific or professional advice. You should, before you act or use any of this Content, consider the appropriateness of this information having regard to your own personal objectives, financial situation and needs. It should not be your only source of information but should be treated as a guide only. You should obtain your own independent professional advice before making any decision based on this information. In no event will we be liable for any loss or damage including and without limitation, indirect or consequential loss or damage, or any loss or damage howsoever arising from, out of, or in connection with the use of this Content.