I’m often asked whether it’s best to pay off your mortgage first or salary sacrifice money into superannuation. With interest rates at a historical low and the average balanced super fund returning just under 10% in the 2013/14 year* it’s an important question.
The answer to this question is never the same; your age, your income and ability to take a disciplined approach to this strategy will all play a part in whether it’s right for you.
Would you drive your car without insuring it? No way! It would set me back both financially and lifestyle-wise if I had an accident and had to replace my own (and perhaps somebody else’s) car.
I mean, I could get by without a car… I could ride one of those trendy vintage cruisers (perhaps not through a Melbourne winter). I could catch public transport. I could even borrow my Dad’s not-so-trendy Valiant now and then.
While I could get away without a car I would prefer not to.
This is why I can never understand why people insure their cars but don’t insure their incomes – quite likely their greatest asset.