Ask the experts

A young couple feel they may have wasted their potential and now want to take control of their finances

NAMES: Martin Kaareng & Heidi Benjaminson STATUS: Getting married this year

QUESTIONS: Where do we invest our money to work for our future? What are the advantages and disadvantages of buying property on the Sunshine Coast for our retirement? Or should we buy in Brisbane where we currently live? Or is an exchange traded fund (ETF) portfolio better in case we move back overseas? Or should we use half the money to buy a share portfolio and the other half for a cheaper property on the Sunshine Coast?

ANSWERS: Buying property can be time consuming and expensive and there is the uncertainty of its value until you have sold. Stick to liquid investments such as low-cost ETFs. You can use gearing too, just as you do with property. Pay off your tertiary loans, particularly while the Australian dollar is strong. If you do want to invest in property, rentvest but not in Brisbane or the Sunshine Coast; there are other areas with better prospects.

When you have lots of options, it is hard to know where to settle down. Heidi is from the US and her fiance Martin is from Norway. They have lived and worked in Australia for five and a half years and later this year they will be married in the US.

They love living and working in Australia but because of the pull of family commitments they haven’t made up their mind entirely where they will settle down. But putting this important decision on hold means that they haven’t taken out a mortgage and bought a home. “Since we immigrated here in our late 20s, I feel like we are at least five years behind where we should be financially,” explains Heidi.

Every year they travel back home to visit their respective families and friends, which costs them around $10,000 each time.

They are great savers but their money is sitting in a term deposit and cash, earning little interest. Heidi says one of the reasons they haven’t made any investments is that they want to keep their options open. “We do want to come back here after the wedding and set ourselves up for the future.”

Their assets include superannuation, to which they each contribute up to the maximum concessional cap of $25,000pa, as well as the savings in the term deposit and cash. They each have student loans overseas.

One option they are weighing is buying a home on the Sunshine Coast. Heidi believes they can get more for their money there than they can in Brisbane, where they live. They love the beach lifestyle and can see themselves retiring to the Sunshine Coast in 40 years. It is too far to commute to Brisbane so it would be an investment property.

Even if they had a mortgage to pay off, Heidi thinks they could still save at a high rate. “We can save a lot if we put our mind to it. We would put the brakes on leisure and travel. We could buckle down and save Herculean sums.”

Another idea is buying a home in Brisbane, for up to around $750,000, in a 12- to 15-kilometre radius of the CBD. Which suburbs are good value with growth potential?

Alternatively, asks Heidi, is it better to buy an ETF portfolio in case they move back overseas, as it would be easier to manage. “Maybe instead of buying a house in Brisbane we could use half our money for a share portfolio and half for a cheaper property on the Sunshine Coast?”

“I feel like we’re the definition of wasted potential and an interesting case study of inaction at work,” she says.