Tax rewards of super

QI am 48 and my wife 44. We have two children aged 19 and 17. I earn $120,000 and year while my wife earns $80,000.

We own our house valued at about $650,000 and have just sold our investment property, making a handy profit of $130,000. I have about $450,000 in super and my wife has $154,000.

I lease a vehicle through my employment – the fortnightly payment is $221 pre-tax and $319 posttax. This is a four-year lease.

Looking to the future:

1. Where do I invest the $130,000?

2. My wife’s super needs attention and we are considering salary sacrificing a portion of her salary.

3. I do not really want to buy another property and have a hefty mortgage in my later years. Will shares be the way to go as I would really like to build something for my children?

Both well-located property and shares are likely to continue to be good investments over the long term, Shaun. Property is on the nose now, while shares had a great year. But this fluctuates over time. So I encourage people to spread their risk and hold both asset classes.

First up for you is ensuring you are putting the maximum pre-tax $25,000 into super via salary sacrifice. You have given me a strong hint when you say you do not want to own another property and have debt later in life. I am pretty relaxed about this given your relatively young age and many working years to go. But I would be quite happy to see you also make an undeducted contribution to super with your $130,000. This could go to your wife’s fund if you preferred or some in both.

The tax benefits of super are high and in a good, low-cost fund the returns in the longer term are likely to be sound. I also love the “no hassle” of super.