Sorry if this has already been discussed somewhere else, but I was wondering whether it would be wise to get early access to super taxfree and put it in a high interest savings account as someone who is eligible to do so but not in financial desperation. Further, I could always put voluntary contributions back later on? Cheers
Putting super into savings account
Lmendyl on 26/05/2020 - 22:06
Comments
Definitely not. You'll lose out over the long term. Not a little, you will lose out on a LOT. See this video and read this.
Interest rates are at their lowest and you get measly returns from a savings accounts (most are hovering between 1-2% p.a, some even offering a 0.1% p.a base rate). Not enough to beat inflation. No matter how volatile the investments are with super, you will always win out in the long term if you stay put. This would be the best time to put more into super since stocks and other investments have tanked.
Buy stocks if you have some money to invest. The market is still recovering so you're essentially buying stocks at a discount. Over the long term, they will increase in value.
Which one are you investing in?
If you're eligible, there's nothing stopping you from doing it.
True, there is nothing stopping you from being an idiot.
It may not be a good idea for most people, but it's not necessarily a bad idea for everyone.
It's all about making an informed decision.
No.
You will lose out a lot over the long term depending what your super balance at
https://www.canstar.com.au/superannuation/risks-access-super… Have a quick read if you want
No
I did with my $2000 super. Probs better in my savings account. Sick of logging into my account once every few months to see all the fees that were taken
You could but why would you? If you really want your money in a savings account then just transfer within super to the "cash" option.
Why would you do this? there will be 1-2 bad years, then 3-5 flat years then 3-5 great years and overall things will head upwards
You could but why would you?
Because you can withdraw it tax-free, then after a couple of months, you "see a financial planner who tells you that what you did was a shit idea". So you stick the whole amount back into super as a post tax contribution…
If only you got proper advice at the start, then you wouldn't be in this err.. "situation"! lol :p
I mean if you meet the eligibility for the government Super co-contribution;
(https://www.ato.gov.au/Individuals/Super/In-detail/Growing-y…)
You could withdraw 2K for now and deposit 1k this financial year (before 30 June) and 1k next financial year (before 30 June 2021). This way you can increase your Super balance which will pay much more than a savings account.
This ^^. When the original low-income co-contribution scheme was active the Government would match your contribution. You could literally double your money. It sure beat putting it the pokies (like my mates did).
I deposited $1k each year for three years (using my tax returns), then the government matched it, and within a few years the $6k had grown to $10k in my Super.
I then used financial hardship to withdraw the $10k and set myself up for returning to uni (car, computer, textbooks, etc). I also re-deposited $5k (over the 5 years I studied of the degree/masters). The co-contributions then added a further $0.50 for each dollar. Then the $7.5k ($5k + $2.5k) ended up back at $10k by the time I graduated.
What's the entitlement now? $500 at $0.50 per your contribution if I read correctly?
So you have to put in $1k per FY to get $500 back. If you put in more, they still only give you $500 right? Where it used to be 1000-1500 per FY?
$2k out, $1k back in per FY and you'll get a free grand in to your super in a couple of months.If you meet the eligibility criteria (earned $37k or less) in each financial year you can easily make $1k in super. However it will take another 12 months (not "a couple") to receive the second $500 in your super (as it will only be calculated/added at end of 20-21 financial year).
It used to be $1 per $1 upto $1,000 per year
Now it is only 50c per $1 upto $500 per yearThe low income super tax offset (LISTO) is a government superannuation payment of up to $500 to help low-income earners ($37,000 or less) save for retirement.
https://www.ato.gov.au/Individuals/Super/In-detail/Growing-y…
@field1985: Yes great tip…I was going to deposit 1k before June and then draw out 1.5k in July ..I wasn’t thinking of next financial year..now you mentioned next year I will deposit 1k before June 30, withdraw 3k in July and then deposit 1k later in august..therefore I am making 1k profit
Maybe.
If you are in a Super cash option only then it's a line ball, but I wouldn't do it.
Financially you will likely be worse off in decades to come, but hey, withdraw the $10k and go wild - live life today.
We have been taught to study for 20 years, then work for 40 years, the retire in the last 20 years and go on vacation. Little did they tell us that many of us will reflect back and have many regrets - wished we had done something, should've done something, could've done something.
We spend most of our lives doing things we do not love because that smarter people have told us doing it this way is normal / or right.
The truth is; "how you feel about yourself when you're by yourself"* - that's all that matters. *Thanks Tom Bilyeu for those strong words.
YOLO. Imagine saving your whole life and just ended up using your hard earned money for nursing homes accommodation. Not to mention, most of the residents in our nursing homes are just 68-84 years of age. Perfect time for accessing you super.
Ok similar vein but slightly different - say you were planning on taking out a personal loan for a holiday or a car or whatever, which would be at a pretty high interest rate. Better off taking money out of super now rather than taking out a personal loan?
(Ignore the 'don't do either' option - obviously a good idea, but the reality is people take out crap personal loans for stuff.)
If you go by barefoot's advice, say you want 20k and you're 45, it'll cost you 50k. At 35 it's worth $80k and if you're only 25, it'll cost you $125k. It would be something like a 45% interest rate to end up worse off than being 45.
I get the temptation is there if it's only a few grand or whatever but it still ends up a lot when it's compounded over 20-50 years.You should only really take it out if you can afford to put it back in as early as possible. Which if you're borrowing money for a holiday or some other silly reason, you more than likely won't put it back in.
There is another thread similar to this, I was late in joining in the comments. If it is to exploit the tax loophole, and you intend to put back soon after, personally, I don't think it is a good idea. My comment from yesterday. And after reading more of what others say, my further comment today.
At the end of the day, it is how comfortable you are with this, and what risks you are willing to take, if you are not "financially affected by COVID-19" (the main reason for this early super release).
No.