Starting early and contributing regularly to an investment plan is the best way to meet a long-term goal. Choosing your risk profile, time horizon and structure is equally important.
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Superannuation is a good long-term savings vehicle, but it comes with restrictions on contributions and lack of access to money. Retirement savings may be supplemented by other tax-effective structures.
Putting money aside to pay for a child’s education requires a serious savings effort, and lack of access to superannuation rules it out as a tax-effective and flexible option. There is an alternative.
Superannuation remains the most tax-effective savings vehicle for most Australians, but the new limits on caps and amounts in pensions will encourage wealthier investors to consider alternatives.
If contribution caps and lifetime limits on superannuation are getting in the way of long-term savings goals, there are other tax-effective alternatives available, especially investment bonds for higher income earners.
Superannuation’s current tax benefits are far from certain given the government’s need for more revenue. Changes are likely to increase the competitiveness of investment bonds (sometimes called insurance bonds).
There are many investment options for children beyond a savings account, but the merits of each are different for everyone. Here’s some guidance for parents of both younger and older kids.