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Maximise them savings.

As a couple we earn a reasonable amount, have a small home with a smallish mortgage and quite a bit in the offset account. We anticipate having $50,000 a year savings. WE plan a family in 7 or so years at which point we will need to upgrade the home.

What do we do with our savings to maximise them?

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Posted by Liam B on 09/04/2014 @ 10:12

Thanks for the question Liam.

You can keep putting money into the offset account – that will give a greater return than any cash deposit at a bank. However the return will very probably be less than you could gain by investing in shares.

The sharemarket has returned an average of 9 per cent a year for the past 20 years, so you can see that this is a far preferable option. So you should really consider starting a share portfolio.

Also, there are tax ramifications to consider in making a decision. You need to be minimising your non-deductible debt (the debt that can’t be used to reduce income) and maximising your deductible debt. So you could consider paying down your mortgage (non-deductible debt) and then taking out a second home equity loan to borrow the purchase price of the shares. This way you are taking advantage of the good returns of shares whilst optimising your tax situation.

Posted by Martin Speedie on 09/04/2014 @ 13:26
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