Money Australia — May 2017

T

hings are looking finan-

cially sound for your

family. You have built a real-

ly solid base as you move

towards the dreaded 50

years old. I am not too

sure why so many people

worry about turning 50. It

must be a hang-up from the

not-so-distant days when we

blokes died, on average, at 54.

It is quite extraordinary that in

just over 100 years life expectancy has

jumped by 25 years. The good news is that for

most of us turning 50 is simply a great excuse

for a party, and I strongly recommend not

missing that opportunity. My 50th went so

well, and I managed to spread it out for most of

the year, that I did a repeat for my 60th.

The media’s moaning about “the problems

of the ageing society” does cause me much

mirth. The “problem” is wonderful for us

humans – it means we are not dying as young.

I am happy to celebrate that.

But as you and your wife’s 50th looms, you

are smart to look at your capital base today

and to ponder what amount of money you

need to live well in the future. Adding to the

challenge is that we are also living better than

ever. That is also terrific but, let’s face it, our

plans for overseas travel, eating out and so on

require more money than camping locally and

boiling beans.

As you have a

defined benefit

scheme, I think I can

safely assume you

have been in it for

some time. Presuma-

bly this will be a multi-

ple of your final salary.

I don't think either of us

can guess what this will be

but I think it is safe to say that

the payout will meet at least your

basic living needs at around age 60-plus.

You can’t do any more there, and as your

wife is likely to be a low-tax payer as a part-

time worker, I don’t think super is as effective

for her, so I’d keep topping it up as you are

now. If she was to go back to full-time work as

the kids become adults, then I think super real-

ly comes into play for her. Now, though, I agree

with building wealth elsewhere.

I appreciate your mortgage is small given

the value of your house and your income but I

would still plan to pay it off reasonably rapidly

and certainly by 55.

Then we turn to the issue of shares or

property. With a home and an investment

property, it is hard for me not to recommend

diversification and to even consider using that

line of credit to build a nice portfolio of local or

international shares. You have not mentioned

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Next step to secure a comfortable future

I

am a little unsure with the direction we

should take in terms of our next invest-

ments. I am 48 and my wife is 47 with three

teenagers still living at home. I earn $165,000

a year and my wife works casually. We have a

mortgage and owe $110,000, a line of credit

up to $235,000 and a main residence worth

$1 million. We have an investment property

in regional NSW worth $425,000 and owe

$300,000. We purchased the property about

10 years ago and there has not been much

capital gain. I am in a defined benefit super

scheme with my employer and salary sacrifice

the maximum $30,000 and am aware of the

reduction to $25,000 from July 1. My wife

contributes $25 a month to her super. We

have shares valued at $25,000.

Although the median house price is $1 mil-

lion in Sydney, should I invest in another prop-

erty and sell the property in regional NSW?

Do I contribute to my wife’s superannuation

to boost this as well?

Anthony

shares, so they may not pass your personal

“sleep-at-night” test, but I always start with

spreading risk as people build wealth.

I am not much of a believer in the “property

prices to crash” headline. Yes, in our major

cities property is downright expensive on

any global comparison. At some stage it will

go backwards. But with powerful population

growth I do believe in supply and demand, and

if property is your thing it is hard for me to

argue it will be worth less in, say, 20 years as

you consider retirement or slowing down.

So providing you do not risk what you have

achieved to date by overgearing, and buy a

good property in a growth location and have

a long-term view, while I am a little concerned

about concentration risk I would not have a

heart attack if you bought another property.

The critical issue is that you keep up what

you have been doing. Top up your super, pay

down your mortgage and make sensible deci-

sions when it comes to borrowing to invest.

Paul Clitheroe PAU L’S V E RDICT

Anthony ... off to a strong start.

ROB SHAW

Paul’s verdict:

Don’t overgear

and risk what

you have already

achieved

Buy in a growth location and

take a long-term view