Set the goals and get serious about saving

QHi Paul. I’m after a suggestion on where to invest my savings. I’m 36 with an income of $139,000 plus super; have $84,000 and $US30,000 ($44,000) in savings; am not married and have no kids. I have no private health insurance and no insurances associated with TPD, death or income protection within super.

I feel buying a house is not ideal as I would get locked into a mortgage for 30 years. My thinking is to take more risk with a rental property (apartment) or some other investment.

I went to a financial adviser and they gave me a six-year plan with three options: buy a house, buy an investment property or invest in indirect property. I like option three as the money is locked in for two years at a time and dividends can be reinvested in more direct investments such as managed funds.

My question is whether this approach is better, or do you feel I could invest in other options. Any suggestions you can provide will be much appreciated.

Well, Hamza, I would argue that the best thing to do is to take action. I am more concerned that people have goals and save on a regular basis. Shares and property have both done well over time and with a growing population they are likely to do so in the coming decades.

I am not really sure what “indirect property” means, given you mention a two-year lock-in. It may be some sort of syndicate, which makes me a bit nervous. Equally it could be listed or unlisted property trusts, but these do not usually lock you in.

A low-cost managed or ETF or something similar is a sensible idea with a long-term view. The adviser has given you a framework to assist with decisions and will know a lot more about your situation than I do. Take a close look at the indirect property suggestion and seek a second opinion if you are unsure.

Your salary is high, meaning some salary sacrifice into super is a good plan. I can see why death insurance is not much use to you, but income protection insurance, I would argue, is important.