Ask Noel
Sydney Morning Herald
Wednesday July 8, 2009
I'm 55 and have always been encouraged to diversify my investments, however when it comes to super, my financial planner assures me that I should put my entire super into the one fund. I know there are a variety of options that can be invested in within the one fund but I still sense it may be wise to have two super funds. What do you advise?It is important you understand the difference between the fund manager and the assets held by the fund. There is a range of master trusts, such as Navigator, Asgard and Colonial First State, that gives you access to a large number of individual fund managers and I would have no hesitation in entrusting my super to any one of them. But the overall performance of your fund will depend on the performance of the assets you choose within that fund and this is where you should focus your attention.I'm 36, single income, no kids, with a mortgage of $230,000. I have credit card debt of $3500 and a personal loan of $7000. I've recently been promoted, resulting in an extra $500 net a month. Would I be better off putting it into the mortgage, a high-interest savings account, or paying off the credit card? Or am I better off topping up my $170,000 super balance? My employer does not offer a salary sacrifice option.You should be attacking the debt with the highest interest first, so my recommendation is to pay off the credit card. Be aware this will have no long-term benefit if you quickly rack up more debt on your card, so make sure you adopt some strict budgeting measures to keep on track. Once the credit card is paid off use the money to attack the personal loan. Once both loans are out of the way, focus on paying off the mortgage.I'm a mid-80s part aged pensioner, part self-funded retiree with a modest share portfolio worth $300,000. Last year I suspected the market had reached the top and a dramatic fall was likely. I decided not to sell for the following reasons: capital gains tax would have to be paid; I would lose franking benefits; proceeds would have to be parked in bank deposits at reduced yield; I would have to pay brokers' fees; and I would suffer a reduced cash flow and have to take from my cash deposits for living costs. So far I'm pleased - high franked dividends are still flowing; Centrelink has reassessed the value of my assets and increased my pension; and cash flow has increased and I have some surplus. I imagine the dividends will be reduced in the future, however when the good times come again my portfolio will be there ready to take off. What are your thoughts?I agree with you entirely. You have adopted a long-term strategy, have stuck with it and are now reaping the rewards. You should be congratulated.This article is general in nature. Seek further advice before making financial decisions. Noel Whittaker is a director of Whittaker Macnaught, a licensed dealer in securities. Questions to Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.smh.com.au/sitewide/askanexpert.html.How long should an investment property be kept to gain the maximum benefits? Would it be three, five or 10 years?As a general rule I believe investment properties should be kept for as long as possible because every time you change a property you lose a big chunk of your capital in capital gains tax and transaction costs. In the long term, the inherent value of a property depends on the land content, so make sure you choose a property in a good location with access to shops and transport.
© 2009 Sydney Morning Herald