Super should be left alone

Gabrielle is keen to reduce a $380k investment debt, but ...

QI am a self-funded retiree aged 61. I have a mortgage on one of my properties ($380,000) and about $60,000 in a super fund (I’ve been contributing $5000 a year for the past seven years). Should I withdraw all funds in super and put them into the mortgage? I have had to discount the rent for the tenants and also I pay land tax. I’m also thinking of selling a unit in Queensland ($250,000) to pay off the mortgage or at least reduce it. I also have $250,000 in a term deposit.

The answer lies in relative returns, Gabrielle. I imagine your term deposit is returning under 1%. Any good super fund will have been averaging around 5%-8%, depending on the investment option you chose. You will have a good feel for returns on the Queensland unit, but my guess is that your term deposit is likely to be your most secure but lowest-returning investment.

Personally, superannuation is the last asset I would touch. If you want to reduce or remove debt and keep the security of the term deposit, I think that takes us to selling a property. Pretty obviously you would go with your worst performing property.

This is a major decision for you. I would suggest you do your research and clearly set out the returns on the assets you hold and take a view on the outlook for them. My view is that our economy will recover. If you share that view, would you hang onto your properties? The interest rate on your mortgage will be low.

A fair bit of the right answer will be personal to you, your situation and your attitude to risk. Once you have all the facts in front of you, don’t hesitate to discuss this with an independent professional, such as your accountant or a professional, fee-charging adviser.