Should I sacrifice more into my Superannuation?

You’re earning a bit more than you need, you’ve got some excess cash in the bank, should you put more into your super? Super is really attractive because when you salary sacrifice part of your income into your super fund, it is taxed as an employer contribution - only 15%. This gives you an immediate 30% more to put into whatever your super is investing in. When it’s time to cash out after 55, you can arrange your payouts such that you are exempt from paying tax. For me though, that’s so far away it’s not really worth thinking about. You never know what will happen tomorrow and you are never sure if the rules of the super game will change with a change in government. For the under 30s (and even under 40s I think), it’s better spending the money now or investing in something that can give you a more immediate return - there’s no point buying a ferrari when you’re too old to enjoy the side benefits.

For those that like to plan 20+ years ahead, though, here’s something worth thinking about:

1. Switch home loan to 100% interest only.
2. Sacrifice up to the maximum allowed into super ($50,000)
3. Pay off house when you retire.

If you think about it, the interest in your home is about 8% and you return on your super should be about this much or more. Add to this the 30% extra you get for salary sacrificing into super, and the capital appreciation of your house (historically at 10 - 15%), and you end out a clear winner. Unfortunately, you can put your principle home into a interest only loan so this only works for an investment house (maybe that holiday house? hehe )

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