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

Is it Better to Pay Off 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

What can $4 million get you in real estate in Chilliwack vs. other places in B.C.?

A 78-acre property with a large house – or you could get a condo in Vancouver or an estate mansion in 100 Mile House

LETTER: Public safety ‘first and foremost consideration,’ says parole board

Board responding to article about Chilliwack halfway house

Widespread concerns spur UFV to halt international enrolment growth

New target hopes to limit international students to 20% of all enrolment to give time to ‘catch up’

Lights Tour 2019 takes everyone on a sparkly ride across Chilliwack

The annual list of addresses compiled by CADREB for the 2019 Tour of Homes is almost ready

UFV & other B.C. universities post $340 million worth of surpluses thanks to international student tuition

Students call for spending as international enrolment produces huge surpluses at many universities

‘Things haven’t changed enough:’ Ecole Polytechnique anniversary prompts reflection

Fourteen women were fatally shot by a gunman at the Montreal school on Dec. 6, 1989

Second warning on romaine lettuce from California region as another E. coli case reported

Two cases of E. coli have been reported in relation to the illness in the U.S.

Braille signs coming to TransLink bus stops in 2020

Transit authority says it’s the first to do so in Canada and the United States

Six B.C. municipalities accepted as interveners in Supreme Court of Canada carbon-pricing case

Victoria, Vancouver, Squamish, Richmond, Nelson and Rossland have intervener status

CUPE issues 72-hour strike notice for SkyTrain

Local 7000 release states ‘parties are still bargaining’, union will have job action plan by Saturday

Abbotsford man was ‘unintended victim’ of 2018 fatal shooting, police say

Jagvir Malhi, 19, was gunned down while on his way to university

Residents in B.C. city could face 133% tax hike in ‘worst case’ lawsuit outcome: report

An average home could see a tax increase of $2,164 in one year

Province wants to seize Langley property connected to drug lab

The Office of Civil Forfeiture is targeting a property on Fraser Highway

B.C. Transit finds 28 used fareboxes online, saves $300,000

‘Someone joked maybe we can buy used fareboxes on eBay,’ CEO says

Most Read