Superannuation or housing… or both?

The debate between investing in superannuation and property has been around for years, but we would say that choosing one over the other isn’t the answer—you really need both. Achieving long-term financial security comes down to finding the right balance between these two key strategies.

At UFinancial, we see both superannuation and property playing essential roles in building wealth and securing your future. Superannuation offers valuable tax benefits and the potential for long-term growth, making it a cornerstone of retirement planning. At the same time, owning a property not only provides a place to live but also holds the potential for capital growth over time.

Australia’s housing market has remained strong, and over the past decade, historically low interest rates have driven many to turn to property as a primary means of accumulating wealth. This extended period of favourable conditions has further cemented property’s role as a wealth-building tool for Australians.

For young Australians in particular, it’s crucial to start thinking early about your financial future. Getting ahead by investing in both superannuation and property early on can significantly boost your financial position over time. It’s worth remembering that at retirement, super is tax-free for most, and owner-occupied housing is effectively another tax-free asset. Your home’s value doesn’t count towards age pension asset tests, which means it could be worth millions and you’d still qualify for a pension.

To build wealth through housing, consider these strategies:

– Government homebuyer incentives and grants

– Don’t expect your first home to be your forever home

– Co-ownership with siblings or assistance from the Bank of Mum and Dad 

When it comes to superannuation, strategies like salary-sacrificing a portion of your wage can help you take advantage of compound interest and tax benefits. Making voluntary tax-deductible contributions and tapping into government incentives like co-contributions or spouse contributions are also effective ways to grow your super.

Sometimes, super and housing can work together to build wealth. Many people own business or residential properties within self-managed super funds, which can help them avoid paying capital gains tax if they sell at retirement. Young first-home buyers can also use super to grow a deposit more tax-effectively, thanks to the government’s First Home Super Saver Scheme. As of September 15, the scheme has been adjusted to provide more flexibility, giving savers extra time to request a release and even the ability to change their mind under certain circumstances.

The bottom line is, it’s not about choosing between superannuation and property—they both have their place in a well-rounded financial plan. By strategically investing in both, you can build a strong foundation for your financial future.

If you’re in the market for a new home or want to check your current loan’s health, click here!! 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent. Content developed in partnership with IFPA.