Take more risk with extra $100k

With almost $1.2m in his super fund, Joe can afford to ...

QI would like to hear your opinion on how best to invest up to $100,000 that is presently sitting in a low-interest savings account. These funds are outside my AMP super fund portfolio, which has built up to $1.19 million with a low-risk profile. I am 66 and retired and currently my only source of income is the super fund.

Hi Joe, our ages are within a year of each other and we have similar issues: deriving halfway decent returns from our spare cash.

My answer to Jacqueline (page 25), gives an example of one possibility: a sensible incometype fund. We all need a bit of “rainy day” money within quick reach, but you do have a large super pot invested in a conservative fashion. An income fund may be for you, or with your conservative approach to super you might be okay with the risk and potentially higher returns from shares or similar assets.

In your case a low-cost exchange traded fund or an indexed fund, investing in our huge global and Australian markets, could be just the thing for you. It really gets down to your attitude to risk and time frame. Personally, I do love franked dividends, so maybe an Aussie dividend fund could be of interest? You’d expect franked dividends of around 3% to 4% and some capital growth over time.

Of course, whenever sharemarkets crash, on paper you’ll be behind, but as you know they do recover. This is why time is a big deal. I am comfortable holding growth investments over 10 years or longer. I spend the dividends or rental income from property and don’t worry about the short-term ups and downs.