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

Abbotsford woman speaks out after she fainted and bystanders ignored her

Meghan Canavan says bystanders walked by with no offer of help after she fainted recently

Fraser Valley Bandits reveal mascot name

Berry the Bandit officially unveiled, makes first public appearance tomorrow

End ‘exploitative’ parking fees at Lower Mainland hospitals, group says

HospitalPayParking.ca is criticizing a new contract between health authorities and Impark

UFV celebrates 2019 HOF class

Third annual Cascades Hall of Fame event occurs on Friday night

Your daily commute and weather forecast: Jan. 22, 2019

A bit of rain over the next couple days, then into another sunny stretch. Plenty of congestion today.

New Canada Food Guide nixes portion sizes, promotes plant-based proteins

Guide no longer lists milk and dairy products as a distinct food group

Heavy snowfall expected for Coquihalla, Okanagan valley

Coquihalla highway, the Connector, and Highway 3, from Princeton to Allison Pass are getting snow.

Judge annuls hairdresser’s forced marriage to boss’ relative

Woman was told she’d be fired if she didn’t marry boss’s Indian relative so he could immigrate here

Video: Runaway Coquihalla dog returned to owner

Archer, the dog found roaming along Coq. Hwy. on Jan. 19, has been reunited with owner

Liberals look to make home-buying more affordable for millennials: Morneau

Housing is expected to be a prominent campaign issue ahead of October’s federal election

Man accused of threatening to kill ‘as many girls as I see’

Christopher W. Cleary wrote he was angry because he’d never had a girlfriend and wanted to ‘make it right’ with a mass shooting

Cannabis-carrying border crossers could be hit with fines under coming system

Penalties are slated to be in place some time next year

Canadian talent abound on newly revamped Vancouver Whitecaps squad

Lineup is full of new faces after the organization parted ways with 18 players over the off-season

Most Read