Best place to in­vest sav­ings

Af­ter clear­ing the mort­gage, Sharon wants ...

Money Magazine Australia - - Q & A -

QMy hus­band and I are both 46, self-em­ployed and earning a gross wage of $43,000 each and have just fin­ished pay­ing off our house (val­ued at $850,000). I have one Flex­i­ble Life­time super ac­count with AMP val­ued at $35,000 and an­other with Colo­nial Super Re­tire­ment Fund ($120,000); my hus­band has one Flex­i­ble Life­time ac­count with AMP ($107,000). I also have 661 CBA shares with div­i­dends rein­vested and we have joint sav­ings of $10,000.

We have three chil­dren: one who is 19 and has left home and a 17- and 13-year-old.

Now that we have paid off our home we are look­ing for the best way to in­vest our money. We were think­ing of a man­aged fund or some­thing that would al­low us to make reg­u­lar de­posits. We do not live a lav­ish life­style and have al­ways saved hard but have not gone with­out. Be­fore our home was paid off we were mak­ing weekly de­posits of $750 to it. Are there any funds that you would rec­om­mend?

It is such a big step when you pay off your home. Con­grat­u­la­tions, Sharon, I am gen­uinely de­lighted for you. Then your el­dest leaves home, also a big step.

The first thing I would do is to com­bine your two super ac­counts into one. You are pay­ing two sets of fees and quite pos­si­bly two lots of in­surance. Take a look at the per­for­mance of both your funds, then look at fees. If both are low fee, I’d go with the best long-term per­former. If both are high, I’d move them to a low-fee fund.

Next, I would add to super. Do check with your ac­coun­tant, though, be­cause as a self-em­ployed per­son you may have var­i­ous tax breaks that I am un­aware off.

Finally, in the mod­ern world there are many low-cost share funds, both listed on the share­mar­ket and un­listed. I am sure Money mag­a­zine will give you quite a few ideas but I am a bit of a fa­natic about low fees, so man­agers like Van­guard or Black­Rock, which have super low fees, do ap­peal to me. Take a bit of time to do some re­search.

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