How should we invest my $500,000 inheritance?

I have recently inherited just over $500,000. My husband has retired and I still work part-time. He is 62 and I am 68.

We own our own home and cars and get an allocated pension each fortnight from my husband’s super. Would we be best investing this inheritance or buying a rental property? There is no right or wrong answer to this question. Ultimately, it comes back to what you are looking for from the investment and how actively or passively you want to invest.

Investing into superannuation, managed funds, ETFs, LICs and the like can generally be seen as passive investments. A portfolio manager makes all the investment decisions on your behalf and you don’t need to worry about that side of it. It also offers you the potential for significant portfolio diversification, rather than just one asset class (such as an investment property).

An investment property will never get any younger so ongoing maintenance is a consideration. In the current climate, renting the property is unlikely to be an issue but it could be in the future. Investing in property can also mean significant up-front costs to purchase, including stamp duty and the like.

A professional financial planner would gain a clearer understanding of your financial position and make recommendations to suit.

My husband is 59 and has almost $800,000 in super. I am 52 with $120,000 in super. We have three teens still living at home – in high school, part-time work and university.

They are likely to be fully dependent for the next two to three years. As an IT

project manager, my husband works contract jobs which vary between six and 12 months and pay $150,000 to $200,000 a year. As such, our income varies significantly. He has the opportunity of a permanent role earning less – $120,000 a year. Should he begin a transition-to-retirement scheme to top up the shortfall? How can we use the TTR scheme to save tax/ top up his income?

Transition to retirement (TTR) offers you the potential to use your accumulated super for income by moving funds into a TTR account-based pension.

Once you have turned 60, the income you receive is taxfree. Earnings in the TTR account-based pension remain taxed at a maximum of 15 per cent (the same as super). Before starting this strategy, I recommend you carefully work out your budget so you understand your livingexpense needs. You can then set up an adequate income stream and avoid drawing unnecessarily on your capital.

Then seek financial advice – getting this strategy wrong can prove very costly! The tax savings arise by making the most of salary sacrificing to super, while meeting your living costs.