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

Setting the stage for emerging performers

Variety fundraiser and ongoing open-mics showcase local talent

Four Surrey students head to New Brunswick for Canada-wide science fair

Three projects move to nationals following regional fair at KPU

Surrey resident says proposed apartment building is a ‘monstrosity’ in Whalley neighbourhood

Philip Galbraith says he voted for Safe Surrey Coalition to ‘slow down development’

Man ‘seriously’ injured in crash after driving wrong way on Highway 17: Surrey RCMP

Police say the sedan hit a transport truck, then another car

Easter ‘eggstravaganza’ event planned for South Surrey

Event is to run from 12-3 p.m. at Dufferin Park (17355 2 Ave.).

VIDEO: Alberta man creates world’s biggest caricature

Dean Foster is trying to break the world record for a radio show contest

VIDEO: Giants draw first blood in Western Conference championships

In Game 1 of the best-of-seven series between Vancouver and Spokane, the G-Men emerged triumphant

Multiple people injured after deck collapses during celebration

Emergency responders rushed to the Langley home

B.C. RCMP receive application for Police Cat Services

RCMP announced the launch of the Police Cat Services unit as an April fools joke

Rats available for adoption in Vancouver

In a social media post the City of Vancouver says you can adopt a rat for $5.

Kirkland Signature veggie burgers recalled due to possible metal fragments

Recalled products came in 1.7 kg packages with a best before date of Apr. 23, 2019

Chaos at the ferry terminal for people heading from Vancouver to the Island

Easter crowds create backlog at Tsawwassen ferry terminal

Parents of 13 who tortured children get life after hearing victims

One of their daughters fled their home and pleaded for help to a 911 operator

Crews battle Burnaby blaze; 2 people sent to hospital

Emergency Support Services helping residents displaced by fire

Most Read