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The holiday season can bring extra cash — whether it’s an year-end bonus, unused leave payout, or a festive cash gift.
But while it can be tempting to splurge, experts say this is the perfect time to make your money work for you.
From investing in stocks and boosting your superannuation to paying down your mortgage, there are several ways to put spare earnings to good use — just be sure to read the fine print, do your research, and seek professional advice if required.

SBS News consulted two financial specialists to explore the advantages and disadvantages of various financial strategies, aiming to help you maximize any extra funds during the festive season.

For those just starting out, experts suggest diversifying your investments is key to gaining a solid footing in the financial world.
Mardy Chiah, associate professor of finance at the University of Newcastle, said before building wealth, it can be a good idea to first pay off high-interest debt, as the interest on that debt could outweigh the benefits of investing elsewhere.
He recommended thinking about your priority, whether that is retirement, wealth building, paying off debt or a mortgage.

“The stock market is highly volatile. Just this year, we’ve witnessed instances where the ASX200 has swung by 2 or 3 percent in a single day due to unexpected policy changes or international developments,” one expert noted.

“Decide whether you want to pick individual stocks or invest in a fund for easier diversification,” Chiah told SBS News.
“For example, you can buy BHP shares directly on the ASX or invest in an Exchange Traded Fund (ETF) that includes BHP and other companies.
“Only invest the amount that you are prepared to lose and don’t need in the short term, as markets are volatile in the short run.”
Rakesh Gupta, an associate professor in accounting and finance at Charles Darwin University, said it’s wise not to rush into any spending decisions.
“Markets swing in days. Wealth builds in years. Patience and diversification win,” he told SBS News.

They also emphasized, “The tax incentives are considerable, and regular contributions can lead to significant wealth accumulation over time.”

However, there are drawbacks: “The downside is that these funds are inaccessible until retirement,” they added.
Gupta said contributing extra to your superannuation can have long-term financial gains and remains one of the most tax-effective ways to build wealth over time.
“Extra contributions into a super work particularly well for people with many years until retirement,” he said.

Gupta highlighted that directing extra cash towards mortgage payments could be more advantageous than contributing to superannuation, explaining that “the return is assured by the interest saved.”

Chiah said there are positives and negatives to this approach.
“Super is a type of managed fund that offers diversification and tax advantages. Contributions and earnings are taxed at 15 per cent, usually lower than personal income tax rates,” he said.

“Downside: funds are locked until retirement.”

Paying down your mortgage
Chiah said both superannuation contributions and mortgage repayments are generally solid options for those who prefer a cautious approach to investing, as they typically don’t require extensive research or active trading.
When it comes to mortgage repayments, he said, if your mortgage interest rate is 5 per cent, you will need to earn at least a 5 per cent after-tax return elsewhere to come out ahead.

Gupta said putting cash towards your mortgage repayments can be a better option than superannuation contributions, because “the return is guaranteed through interest saved”.

“It reduces financial stress, lowers required living costs in retirement and gives people a sense of security that is difficult to quantify but very real in practice,” Gupta said.

“Extra super grows wealth. Extra mortgage payments grow certainty. Blending both works for many people.”

Other forms of investing
Chiah also flagged other forms of investing, typically lower in risk compared to the stock market.
— Term deposits: Low risk and low return, but often below inflation.
— Bonds: Lower risk than stocks, provide steady income.
— Managed funds/ETFs: Quick diversification without picking individual stocks.
— Real estate: Steady income via rental, but less liquidity. Also requires a large initial outlay, often 20 per cent deposit plus stamp duty.

— Alternative investments: Private equity, commodities like gold, and cryptocurrencies such as Bitcoin. These can offer further diversification but are complex and carry unique risks.

Extra super grows wealth. Extra mortgage payments grow certainty.

Rakesh Gupta, Charles Darwin University

Whether or not you choose to invest, spend or save, Gupta said having financial buffers where possible is a good idea.
“Investing without an emergency fund or while carrying high-cost debt tends to backfire.
“And circumstances change over time, so reviewing your plan each year is important.”
Disclaimer: The information in this article is general in nature and is not intended as financial advice. You should consult with a licensed professional to make the decisions that are right for you.
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