Keep build­ing up in­vest­ments

Money Magazine Australia - - ASK PAUL -

Q

I am 50 and due to my health not be­ing in great shape I have prob­a­bly eight to nine years left in work. My wife is 48 and works part time on $26,000 a year and is wor­ried about our sit­u­a­tion.

We own our home, which is worth $500,000, and have $220,000 in term de­posits and $270,000 in my su­per, into which $730 of salary sac­ri­fice and em­ployer con­tri­bu­tions go each fort­night. We have an Aus­tralian shares man­aged fund worth $185,000 with Colo­nial First State.

I earn $70,000 in my cur­rent job, and have an army pen­sion of $25,500 and a tax-free Veter­ans Af­fairs pen­sion of $11,700 a year with a gold card. Hope­fully TPD will be an op­tion when my war-caused in­juries are too hard to deal with. Please pro­vide guid­ance as l have worked hard all my life and l don’t want to make mis­takes in the next five to eight years. Dar­ryl, my view is that you should play it safe. Your health is not great but you have a very solid as­set base in your house, $220,000 in safe term de­posits and some $450,000 in shares with Colo­nial and your su­per fund. Then you have your army pen­sion and a Veter­ans Af­fairs pen­sion.

It looks as if you are max­ing out your pre-tax con­tri­bu­tions to su­per, which can be up to $25,000pa. Ex­tra salary sac­ri­fice su­per con­tri­bu­tions by your wife will not be that valu­able as she is a low in­come earner. Su­per, how­ever, is a good place to keep your sav­ings and you could con­sider adding some as af­ter-tax con­tri­bu­tions (ie, your own money). Equally, I have no prob­lem with you build­ing up your man­aged fund with reg­u­lar con­tri­bu­tions, or adding to the term de­posits. This is a risk-based de­ci­sion. In the short term, shares are riskier but likely to pro­vide higher long-term re­turns.

With a fully owned house, your pen­sions, term de­posits and a good amount in su­per and shares, you are re­ally in a sound po­si­tion. I’d just keep build­ing your in­vest­ments on a reg­u­lar ba­sis.

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