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

Provincial COVID-19 data can now be used for B.C. to prepare for a second wave

In the past week, B.C. has seen a slight spike in daily test-positive case counts

Child falls down Bridal Veil Falls near Chilliwack, crews on scene

An 11-year-old boy fell over the falls about 25 to 30 feet and has suffered a head injury

Agassiz Return-It Depot slated for modernization

Soon, no more sorting alcohol and non-alcohol containers, Return-It says

LETTER: Thank you, OK Tire Agassiz!

Roger Bjaanes of Harrison Hot Springs applauds some great customer service

LETTER: An unforgettable birthday

Grace Storteboom of Agassiz thanks everyone for an amazing birthday

Islanders want BC Ferries to follow order that lets residents board before tourists

For ferry-dependent communities, ferries are often the sole practical lifeline to work, school or medical appointments.

Fraser Valley loses the Keith Wilson Waver as Ron Hupper passes away

Hupper brought smiles to the faces of hundreds of people traveling Chilliwack’s Keith Wilson Road

Beverly Hills 90210 star’s family selling Vancouver Island Beach Resort

You can own Jason Priestley’s Terrace Beach Resort in Ucluelet for less than $5 million

Genetic detectives begin work to trace spread of COVID-19 in Canada

The kinds of genetic technology being used for this project did not exist when SARS hit Canada in 2003

Sports fishers protest Fraser River Chinook closures

Public Fishery Alliance wants hatchery fish open for harvest

Woman sexually assaulted, robbed near Surrey SkyTrain station: RCMP

Police say the incident happened July 10, just after 11 p.m. near King George SkyTrain station

B.C. Ferries increasing passenger capacity after COVID-19 restrictions

Transport Canada 50-per-cent limit being phased out, no current plans to provide masks

Once-in-a-lifetime comet photographed soaring over Abbotsford

Photographer Randy Small captures Comet NEOWISE in early-morning sky

Most Read