Investment bonds are an ideal gift for granddaughter
YOUR ADVICE
I WOULD like to invest one or two thousand dollars for my new granddaughter. Bank deposits won’t get her anywhere so is an investment bond the answer?
I believe all the tax is paid, and although it will be in my name can I just state in my Will that it is to go to her when she turns 18. Is this correct? Where do I buy investment bonds, or do you think there is
I think investment bonds are perfect, and if you buy a share based one you can take advantage of the present down market. Any good financial adviser should be able to recommend a bond that suits your goals and your risk profile and also set the bond up so the proceeds can be transferred tax-free to her at a date you decide.
I HAVE a $500,000 equity in my home. What would be the best way to invest it and receive a decent yearly return?
The only way to access the equity in your home is to borrow against it, or sell a part share of the property. Obviously, selling is not a good option which leaves borrowing, and if you do borrow you should understand that all the equity in the world is useless unless you have the income to service any loan you take out.
Furthermore, the interest would bite into any earnings that the investment you buy would produce. If you are a senior you could talk to your bank about borrowing by way of a reverse mortgage. These loans require no repayment of principal or interest but keep in mind that the debt will double every eight years, therefore the loan should be small and delayed for as long as possible I AM single and will retire in July at 64. I have $800,000 in super ($185,000 defined benefit and $615,000 in a flexi pension as I am transitioning to retirement), own my own home and have recently inherited some money. After home renovations and giving money to my children I will have around $600,000.
My financial adviser is encouraging me to add this to my super as I am under 65 and can contribute $540,000 before I retire.
I am also thinking of buying an investment property outright to provide a regular income as well as the security of bricks and mortar, in addition to my super pension. What are the pros and cons of this plan?
It really gets down to whether you would rather have more money inside super or whether you believe you will get better returns from an investment property. My fear is that investment properties tend to deteriorate over time, require increasing maintenance, and can be harder to rent. Before you make a decision talk to your adviser about managed funds that focus on income.
Noel Whittaker is the author of
and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au