Paul’s verdict

The rent from your investment property is a handy amount that will rise with inflation

These are important questions, Sharon. Frankly, they are far too important for me to answer in a black-and-white fashion in this short column. So I am going to ask you to talk to an independent adviser but I do think I can provide some ideas.

I do agree with hanging onto the Brisbane property. I think it would be giving you rent of about $350 to $400 a week after expenses. This is a very handy amount and, of course, it will go up with inflation over the years.

But the next step, which you can do without needing any advice, is to look closely at the lifestyle you want to live and its cost. Your fixed costs are pretty easy to work out: rates, insurance, car costs, health, food and so on. If you add in your travel costs you will quickly come to an annual amount you need. This is probably the most important thing you will do. Money just gives you options, and the only way to get “full value” out of money is to decide how you are going to use it.

You also need to think about your home. You don’t mention this but given you have owned two investment properties, and still own one, I am sure you own a home. I’d like you to think about whether this is where you are for the long term. This bit is better done with an adviser but, as you know, your home is a tax-free asset and does not count as an asset for pension purposes. One perfectly logical strategy, if you wanted a different home, is to look at owning a more valuable property and qualify for at least a part pension when you reach the pension age which, depending on your birth date, I think would be 67.

This is not an idea you would consider without a great deal of planning. So let’s put this aside for now and look at the money you have to invest. You mention super and I am inclined to agree with you. As you say, you can put $100,000 a year of your own money into super. But you can “bring forward” three years of contributions and put in $300,000.

Again, this is not something you can do without a lot of thought and, in my view, seeing a professional adviser. Your existing fund may well be a very good one and you could add to that. It would be important to check the perfor- mance of the fund, its fees and so on. The plus, of course, is that super has been a very good long-term performer. Some years it will go backwards but if we look over the decades the performance of the typical fund has averaged around 9% a year. How much you put in would be very dependent on your spending needs and your long-term plans but super is a great place to keep your savings.

Finally, don’t worry about paying capital gains tax on your Brisbane investment property. You will only pay this tax when you sell, and it may be that you keep the property for many years. The other big advantage of a capital gain is that you get a 50% discount on tax payable. Again, I would put this issue aside.

The decisions you make are really important and I do think some professional advice would be very valuable. If you don’t already know an adviser, you could see if your super fund has an advice service or you could call the FPA to find an adviser near you. I would suggest using an adviser with a CFP qualification.