Maxing out my pension plan

I’ve decided, though it pains me to do so, that I need to put car payments on hold for two weeks so I can save $1000. I won’ be able to touch this $1000 for 30 years, so why would I put my debt-free existence on hold – even momentarily – to do this?
Well, it just occurred to me how stupid I was last year, when amid all the efforts I put into debt repayment, I didn’t scrounge together $1000 as a voluntary contribution to my superannuation (as we call pension plans in Oz).

That’s because for people on my income level, for every $1000 they voluntarily contribute in to their retirement account, the government will add $1500 cold hard cash as well.  That’s an immediate 150% return, people!

I may never qualify for this again, so  I figure I’m going to make the most out of it. So as well as the regular employer contributions that go in each week, my pension plan will get a $2500 boost this year, besides any investment return that is achieved.

I should probably get that money in quick smart too. I read in the paper this morning that $37 billion (yes, billion!) was wiped off the Australian share market yesterday! Apparently we are being hit by `weak investor confidence’ in the wake of `the US subprime fiasco’. A lot of our banks borrow from US lenders, so it is hitting us here despite our strong property market.

Anyway, that probably means my $2500 will buy more units in the pension fund than it normally would, so that’s got to be a bonus!

 Meanwhile, my hubby and I spoke to a financial planner (someone in our family) yesterday and organised the managed fund for the investment we are setting up for our son. As I’ve said previously, we have $1000 in birthday and Christmas money saved, and we aim to add $100 a month. The planner recommended a moderately aggressive approach because we don’t aim to access the money for such a long time. He said that over the long haul, we could probably expect about a 10% return a year on the investment (shorter term, the figures may be better but there may also be some years where there is no or negative growth, so that has to be factored in). We are happy with this, and feel glad we are in a position to do this at all.


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