I'm at a point of my career where I'm starting to earn decent money and can put decent chunks away.

The question I have is mostly around whether I should max out my superannuation contributions in Australia.

My understanding is that I can contribute up to $25k/year to my super at the lower tax rate of 15%.

In terms of return on investment, this seems like an easy win.

The downside of course is that I can't use this money until retirement.

I have a student loan of $27k from the New Zealand government - this is currently accumulating interest at 4.3%.

The question is - if I have say $15k a year I can either be contributing extra to super, or paying off my student loan, or putting into an index fund or similar - and potentially buying a house in the future - what's the calculation I need to make here?

As far as the house calculation goes - as far as I understand it - it's if (estimated capital gain + benefits of owning a house) - (cost of mortgage interest + rates + other expenses - cost of rent you would be paying otherwise) > amount you would earn from investing then buy a house.

Is there anything I'm missing here? For example - any tax incentives for owning a house?

Short of house prices doubling again in the next few years kind of thing - is there any reason I shouldn't be just maxing out my Super?

Additionally - it looks like a lot of the more aggressive index funds perform better than 5% - is it reasonable to just pay the minimum on my student loan - and put my in index funds, rather than paying my student loan?

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    1) How long would you be paying off the student load with only min repayment? 4.3% of 15K is about 650? Thats a guaranteed return on your 15k investment. Any other option you're suggesting has a greater risk but with more risk comes a greater chance of reward. 2) How much risk do you want? Dec 19, 2018 at 21:59

1 Answer 1


Generally you should pay of your debt first, even thought the interest is not that high it is still not deductable, meaning your paying any interest accumulated on the debt with after tax dollars.

If you are looking to buy property in Sydney you should wait a bit longer, prices are still on the way down and if Labor gets into Government next year (which is likely they will), and they tinker with Negative Gearing (as they said they would), then Sydney house prices are likely to fall a bit further. I think it might be at least a couple of years before house prices start to improving again in the Sydney market.

You can always invest in super and an investment property at the same time. Have you considered a Self Managed Super Fund (SMSF). After paying off your debt, you can start building up your super. You are right about contributing a max. of $25K into super each year from pre-tax dollars (that is, employer contributions + salary sacrificing + deductable contributions), but you can also contribute an additional $100K from after tax dollars.

So if you build up your super and then in a couple of years time you could start a SMSF and transfer you funds over to it, just in time for when the Sydney property market starts to recover. You can also have some index fund investments in the SMSF as well.

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    There’s a significant gotcha with Super if the OP intends to live in the house he buys.
    – Lawrence
    Dec 18, 2018 at 8:25
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    Is giving advice on the future house market a good idea? 1) we can't predict the future 2) It won't help anyone after the time period passes. Dec 18, 2018 at 21:19
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    @JamesKhoury - firstly I am not giving advice I am just informing of what can be done with SMSFs, secondly I am not predicting anything I am just saying buying just after a peak in the market when prices have just started falling is a bad idea, and a better idea would be to be observant of the property cycles and buy when conditions start to improve.
    – Victor
    Dec 19, 2018 at 0:41
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    @Victor I just meant that saying what might happen if a possible change by a possible future government isn't going to be that helpful. Saying that it's not good to buy while the market is starting to fall is a better idea. Dec 19, 2018 at 1:11
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    @JamesKhoury - that's what I did say and then added that if policy changes that might add to further downward pressure.
    – Victor
    Dec 19, 2018 at 2:17

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