With interest rates on the rise, should l concentrate on paying down the mortgage and put a hold on investing? Alison Stanbridge Financial Planner and Chartered Accountant at dmca advisory answers this tricky question.
Interest rate rises can make those with a mortgage anxious. Thinking about whether to invest, add to super, pay down the home loan or a combination may keep you up at night, but the answer depends on your own personal circumstances.
Much of this has to do with where you are in life right now. Are you double income no kids but looking to buy your first home? Do you have dependents and are still trying to plan for school fees and expenses associated with raising a family? Or are you down the track of empty nesters, not yet pre-retirement, but looking to the future?
In this market it is best to first get a picture of where you spend your money and how much disposable income you have left after all your expenses are paid. Then put a budget in place. Having a budget is important at all stages of life and is part of the way to helping you achieve any goals.
For any budget surplus, if you are in a situation where home loan interest rises don’t tend to worry you too much, it will be a matter of working out just how much you have to invest comfortably. Then your appetite for risk and investment timeframe. Superannuation is still a great choice with great tax advantages but for anyone investing you should consider your needs for accessing those funds in future.
For those looking to start investing or investing further, there may be opportunities this year as most listed stock values have decreased.
Whichever way you go, getting the best advice about your strategy before you start is important. There may be many questions you need to ask yourself about your current finances, your future goals, and where the opportunities could be to build a real nest egg for the future with the lowest risk. If you need assistance, get in touch.