It乌鸦传媒檚 a question that financial advisors hear all the time: should I pay off my debt or save? Making the right decision doesn乌鸦传媒檛 have to be difficult and at Prospera Credit Union, they have Certified Financial Planners available in every branch that can help you develop a strategy that works for you.
乌鸦传媒淭here is no right or wrong answer,乌鸦传媒� said Jonathan Lo, Relationship Manager at . 乌鸦传媒淲hat you choose must make sense for your personal situation. Start by assessing your current state: how much debt you have, and what the interest rates are on those debts. Then, together we can talk about your short and long-term goals and how you can get there.乌鸦传媒�
It makes the most sense to save (or invest) when your investment return is expected to be better than the interest charged on your debts. For those who have a low risk-tolerance, expecting an investment which only generates a small return (think three or four per cent) to outperform the interest charges on your debt doesn乌鸦传媒檛 make sense. An advisor will help you analyze the rate environment to decide what option works for you. They乌鸦传媒檒l also help you decide if it is better to pay down your debt so that you can then start saving at a pace that you乌鸦传媒檙e comfortable with.
An option that many people don乌鸦传媒檛 consider is borrowing to invest. Working with an advisor can help you use this tactic to save money and taxes 乌鸦传媒� for non-registered investments, interest charged is tax-deductible if the loan is used for income generation. This is a great option but keep in mind, you乌鸦传媒檒l want to work with your advisor to make sure it makes sense for your unique financial goals.
乌鸦传媒淏oth paying off debt and saving, instead of concentrating on one or the other, should come side by side,乌鸦传媒� Lo says. 乌鸦传媒淥nly paying off debts will ensure you miss out on the growth potential effect of investments. Concentrating on saving, you may end up heavily indebted before retirement. Working with an advisor will ensure you get the most of your savings and pay off what you need to, when you need to.乌鸦传媒�
There乌鸦传媒檚 never a wrong time to look at your financial future. Speak with a Prospera advisor today to explore how they can help you find the right plan for your life.
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