The Australian dollar is falling, should I switch my super?

It could be however that your goal is to build up as many assets as possible and your planned end game with the property is simply to sell it off at some point in the future. If that’s the case it might be better to invest your surplus cash and maximise the negative gearing elements of the investment property. This would be especially the case if you’re on a high marginal tax rate.

Should I pay off my HECS? I have enough in my re-draw to get rid of it. I’ve never worried about it before, but it jumped up quite a lot this year.

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There is no interest charged on HECS debts. However, the balance does get adjusted each year for inflation. For a very long time, inflation was low, however, it has spiked following the COVID-19 reopening. As a result, the indexation applied this year was unusually high at 7.1 per cent.

The Reserve Bank is working hard to get inflation back within its target of 2-3 per cent. They still have some way to go, but it’s trending in the right direction. As such it’s highly unlikely that we’ll see another indexation applied that is as high as what occurred this year.

If your HECS debt is small, perhaps below $10,000, and you want to get rid of it just from a housekeeping perspective, then go for it. But financially it’s likely to continue to be a very low-cost loan, so my inclination would be to keep the money sitting in your mortgage.

Paul Benson is a Certified Financial Planner, and host of the Financial Autonomy podcast. Send your questions to: paul@financialautonomy.com.au

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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