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.

Just Posted

Cops For Kids ride wraps in Okanagan

No pomp, no circumstance for end of milestone 20th anniversary fundraising bicycle trip

Province opens ‘middle income’ housing in Kelowna

Prices on the units are $1,300 for a one-bedroom and $1,780 for a two-bedroom, nearing area-average prices

Former Kelowna cop faces fourth lawsuit alleging sexual assault

Ex-Mountie Brian Mathew Burkett is also separately facing seven charges of breach of trust

B.C. or Ontario? Residential school survivors fight move of court battle

It’s now up to Ontario’s Court of Appeal to sort out the venue question

B.C. transportation minister will not seek re-election

Claire Trevena has held the position since 2017

Young B.C. cancer survivor rides 105-km with Terry Fox’s brother

Jacob Bredenhof and Darrell Fox’s cycling trek raises almost $90,000 for cancer research

B.C. migrant, undocumented workers rally for permanent residency program

Rally is part of the Amnesty for Undocumented Workers Campaign led by the Migrant Workers Centre

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Preparations underway for pandemic election in Saskatchewan and maybe B.C.

Administrators in B.C. and around the country are also looking to expand voting by mail during the pandemic

Okanagan company backs Orange Shirt Day contest

Vernon-based Tolko Industries sponsors art contest open to kids from kindergarten to Grade 12

Nearly 20 per cent of COVID-19 infections among health-care workers by late July

WHO acknowledged the possibility that COVID-19 might be spread in the air under certain conditions

Supreme Court Justice Ruth Bader Ginsburg dies at 87

The court’s second female justice, died Friday at her home in Washington

Most Read