Where to invest home sale funds in volatile markets
I am 77 and my husband, 79, and I recently sold our family home and moved into an “over 55s” retirement village. We are on the full age pension and a small pension from our super funds and after the sale of our property received excess funds of $160,000. Our current bank balance is $200,000. We have CBA shares valued at around $73,000. We both have a small super balance of around $45,000 and $38,000 respectively. Our dilemma: because of the volatility of the markets at the moment we are not sure whether we should make a contribution to our super funds. Originally, we were thinking of contributing $50,000 each. We have until about mid-November to do this. We have several questions. Firstly, should we go ahead and contribute to our super accounts and if so, how should we invest it? Secondly, if we decide to leave the funds in the bank, should we just invest in term deposits? Finally, what implications are there for our children as regards their inheritance if we opt to put extra into our super funds?
To answer all three of your questions directly, would mean giving you “professional advice” which I am unable to do here. Investing into superannuation, using the downsizer contribution rules, enables to you (in effect) top up your current income streams and generate greater income over time. Yes, we are currently seeing investment market volatility, but look long-term (5-plus) years with any diversified portfolio. Investing into superannuation under the downsizer rules means that you are making a tax-free contribution. From an estate planning perspective, this results in no taxation implications for your children who might inherit this part of the portfolio. I have seen that with the raising of interest rates by the RBA, term deposit rates are starting to improve. These are investments for the very conservative investor, but also offer stability to overall portfolios.
I currently have a Term Allocated Pension (TAP) within my Self-Managed Super Fund. I am planning to roll funds into an Industry Super Fund but am having difficulty in finding a Fund that will accept a TAP. Can you suggest a fund that will accept a TAP please.
There are very few investment providers that offer Term Allocated Pensions these days. A simple Google search will allow you to find some. I am unable to recommend a specific fund(s) in response to your question as it would be “personal advice” which I am not able to provide in this column. You could meet with a professional financial planner who can get an understanding of your situation and make an appropriate recommendation in a Statement of Advice. Brenton is a director and an authorised representative of Goldsborough Financial Services Limited. His advice should be considered as an opinion. Readers should consider engaging their own personal financial adviser. Questions and answers may have been edited for length.