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Term deposit or super - Which one is best for me?

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Q. I have $17,100 in first state super I’m retired on a carers pension and am 54yrs old, I wish to invest $20,000 I don’t know if I should go with our bank in a term deposit at 8.1% or put it into my super?

Josie’s answer: Assuming you are not working and your sole income is the carer’s pension, then there is no significant advantage to contributing to super as the earnings within super are taxed at a maximum of 15%.

A possible advantage of contributing the funds to superannuation would be to maximise the pension should your investments exceed the income and assets test.

The reason for this is that you are under age pension age and funds held in superannuation funds are not counted.

I am also assuming you do not work and consequently not eligible for the superannuation co-contribution. To sum up, I think a 8.1% pa no risk return on your investment is pretty good at the moment (due to market volatility and uncertain economic environment).

Of course the disadvantage of term deposits is that you are not able to access the money, without penalty, until the nominated term has ended. You also need to ensure that Centrelink are kept fully informed.

Check out some more articles about Superannuation co-contribution from around the web:

Am I Eligible For Super Co-Contribution?
Super Rules, OK?
Retirement fund co-contribution arrived
The Miracle of Super and the curse of the mortgage
Contribution Rules
Superannuation - What is the Government Co-Contribution?
Super Co-contribution
Retirement account creeping back up
Aussie Superannuation Information.

Wishing you and your family all the best.

Josie Kay

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