Where to invest a $3m property windfall

Q

My disabled wife and I are both 45 and will receive a lump sum of $3 million from a property sale soon. We have four kids, total debt of $55,000 at 14%pa, rent at $450 a week, and food and electricity costs of $400 a week. Our only assets are household items and two vehicles. Our gross incomes are $60,000 and $40,000.

We would really like to purchase our own home and have a good but steady income. What would be the best thing to do: buy the house outright and invest the rest or invest the lot and borrow for a house? If we invest, what would be the best way to get a good and steady income?

Crikey, that is a large amount, Chris! $3 million will really set you up for life. Pretty obviously, clear out that $55,000 in debt to start with. Then if I was in your shoes I would buy a home for cash. People bang on about “invest and rent” and I get the technical argument that investments may return a higher amount than the cost of your mortgage, but what about the security of owning your own home?

This is your personal decision but I reckon you would be poorly advised to invest and rent. In fact, I would be suspicious of the motives of anyone who took you down this path. Three million dollars is a huge amount and I would protect it by buying a home, investing the rest and then building super from your employer’s contributions and topping it up if you can.

With four kids, this is a wonderful chance to protect your future. I would be horrified if you took unnecessary risks.