Where to invest $10k: expert picks

The very best advice I can give when it comes to investing the proceeds from a divorce settlement is to take your time. The best investment you will make after a divorce is not property, shares or super. It is an investment in time to build a future plan for your life and your money. This will be one of the best investment decisions you have ever made.

Divorce is inevitably a time of high emotion, stress and uncertainty. I know that once a financial settlement is reached and there is money to invest, there is a new sense of being in control of your own money and the desire to “move ahead” and make decisions. But there are so many variables. Will you reduce your mortgage, buy a home or an investment property, top up your super or buy shares? Then there are far more important things. Will you keep working, or go back to work? There are complex issues relating to children, other family members, your age, where you want to live now and in the future and, more broadly, how you want to live your life.

If you listen to all the advice from family, friends, the media and people like me, you may well feel under pressure to make decisions. But these can go badly wrong. I have seen people take a divorce settlement and rush into buying a property, without the time and thought put into the right location and also enough research to ensure a purchase is made at a sensible price.

Others have paid off their mortgage. Now that sounds great but then they have found that a job was harder to get than they thought, meaning they needed access to the money. As you can imagine, this trip to the bank goes badly. The bank can’t set up a new mortgage if you have no source of income.

Here, though, there is a piece of simple advice. If you have a mortgage it may have an offset account, or your lender can set this up for you. Putting your divorce proceeds here is a good “holding” plan. It means you are in effect earning risk free and tax free the rate of interest you are paying on your mortgage. And you can access your money.

I’ve seen others put the maximum possible into superannuation – and then realise they can’t access it until they retire. Others have raced out to buy shares without enough thought, or made an emotional decision to buy a beach house they really can’t afford.

So my advice is very simple. Do not do anything until you have invested enough time to create a plan about your own future. Once you have this personal framework worked out, investment becomes a lot simpler.