WHAT IF I STARTED WITH $20,000?

At this starting point the transaction costs are still relevant and the investment options are limited. However, I think this is enough to diversify the original recommendation to include $10,000 of Australian share exposure. I would not expect this to increase the overall return, despite the significant boost from franking credits. But I would expect it to reduce risks.

Along similar lines to my $5000 recommendation, I would suggest an active and passive option depending on your circumstances. For my active exposure, I would recommend the listed investment company Century Australia (ASX: CYA). Wilson Asset Management has recently taken control of investment management – we have a very high regard for chief investment officer Chris Stott and director Geoff Wilson. For my passive recommendation, I would go with the Vanguard Australian Shares Index ETF (VAS), which tracks the S&P/ASX 300 index.