Making the right decision doesn’t have to be difficult.

Should You Pay Off Your Debt or Save?

There’s never a wrong time to look at your financial future

It’s a question that financial advisors hear all the time: should I pay off my debt or save? Making the right decision doesn’t 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.

“There is no right or wrong answer,” said Jonathan Lo, Relationship Manager at Prospera Credit Union. “What 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.”

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’t make sense. An advisor will help you analyze the rate environment to decide what option works for you. They’ll 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’re comfortable with.

An option that many people don’t consider is borrowing to invest. Working with an advisor can help you use this tactic to save money and taxes – 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’ll want to work with your advisor to make sure it makes sense for your unique financial goals.

“Both paying off debt and saving, instead of concentrating on one or the other, should come side by side,” Lo says. “Only 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.”

There’s 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.

***

A credit union serving British Columbia for more than 70 years, Prospera is proud to serve its 63,000 members from locations in the Lower Mainland, Fraser Valley and Okanagan.

Comments are closed

Just Posted

In split vote, Surrey council gives early nod to draft budget

Councillors Locke, Pettigrew, Hundial and Annis vote against capital program

In Surrey panto show, ‘quite the departure’ for key players

Royal Canadian company brings ‘Hansel, Gretel and the Strolling Players’ to stage

Girl, 6, lured from elementary school, sexually assaulted: Vancouver police

Police are seeking dashcam footage from nearby Sexsmith Elementary School in South Vancouver

Family of South Surrey torched-SUV victim to make public appeal

Still no arrests or charges in homicide of Bhavkiran Dhesi: IHIT

City of Surrey asks Vancouver for help with municipal policing transition

Meantime, Surrey’s draft budget recommends hiring no RCMP officers in 2019

MAP: Christmas light displays in Surrey, Langley and beyond

Send us pictures of your National Lampoon-style lit-up homes, nativity scenes or North Pole playlands

Man charged after B.C house fire triggers high-grade explosives

Thomas Daniel Kendall charged with causing bodily harm by failing to properly store explosives

Firefighters battle barge fire on Fraser River

Barge contains several living quarters, no news on injuries

Update: Coquihalla re-opens after vehicle incident

Highway 5 is set to reopen after 1 p.m.

Stop ‘renovictions,’ B.C. housing task force says

MLAs call for end to strata bans on renting vacant suites

Man caught on camera allegedly trying to defraud ICBC

Auto-insurer warns B.C. drivers to record info after crashes

B.C. Liberals call for outside audit of Speaker’s office, NDP refuses

Auditor General implicated in Darryl Plecas accusations of impropriety

Three victims of ex-ski coach Bertrand Charest suing Alpine Canada

The victims are also seeking $150,000 each in punitive damages

Most Read