Macquarie assesses popular wealth creation strategies
David Shirlow
Macquarie Banking and Financial Services Group has produced a model that assists advisers in choosing whether superannuation, mortgage repayments or negatively geared investments are best for their clients.
“What wins out of salary sacrificing into superannuation, paying down your home loan or negatively gearing into an investment portfolio is one of the questions clients most frequently ask their financial adviser,” Macquarie head of technical services David Shirlow said.
He said that while it would be impossible to determine what would be best for a client without knowing their particular details, the Macquarie modelling can assist with a comparison by taking into account financial advisers’ variations in assumptions about return rates and borrowing rates.
“Although investing in superannuation does look attractive in a number of scenarios, there are scenarios where negatively gearing and reducing your mortgage debt would produce a better result,” he said.
“Due to last year’s superannuation legislation changes, this type of comparison is now much easier for an adviser to do,” he added.
Shirlow said that two of the main factors that should influence a client’s choice of strategy are the marginal tax rate that applies to them and the amount of time until they reach the retirement age of 60.
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