It’s now time to diversify

Simon already has three properties, so ...

QIam hoping you can guide my wife and I in the (fortunate) situation we are in. We are both 45 with two children, aged 8 and 11. I earn $120,000 a year and my wife earns $88,000. We have been lucky enough to pay off our home over 15 years and it is now worth

$1.4 million.

We have two investment units: one worth $500,000, on which we owe $160,000, and the other worth $350,000, on which we owe $275,000. We have $20,000 in an offset account on one of those loans. We also have a $30,000 loan against a $180,000 share portfolio.

We have been putting money into ASG for the children’s education since they were born. This will largely cover their school fees but we realise there will be other costs associated with their education. I have $280,000 in superannuation and my wife has $130,000, both in industry funds.

We realise we are in a good situation but would really like to make sure we don’t tread water. Ideally it would be great to create enough wealth so we can work for enjoyment rather than feeling as if we have to do it.

We had been thinking about investing in another residential property but have also had the idea put to us of creating a self-managed super fund to perhaps invest in a mix of commercial property and shares. Is there a strategy you would recommend?

I do like the “quiet achiever” approach, Simon, but I don’t think luck has much to do with your situation. You have saved hard over the past decade and a half and deserve the success you have achieved to date.

With a home and two other properties, I do think the time has come for some diversification. Yes, you could keep buying properties and this may work out well, but I just don’t like seeing people with all their eggs in one basket.

So I quite like the self-managed super fund with exposure to commercial property and shares. But I do want you to check the costs of establishing and running an SMSF. I have one, and it is not cheap to run, but it does give me the ability to make my own investment decisions.

The ability to gear into a small commercial property with a long-term view and then add some decent quality shares appeals to me, as it really does improve the diversification in your portfolio.

Congratulations to you both. You are in a great position and capitalising on this by continuing to save and invest, while spreading your risk, has got to be a good plan.