‘Bad’ debt
could end up
costing you
thousands of
dollarsinthe
long run
fringe benefits plus reportable employer super contri-
butionsislessthan$40,000andyoumakeanafter-tax
contribution to their super account, you may be entitled
to the spouse contribution tax offset (of up to $540).
2
Consider asset allocation
Oneofthebiggestmistakesacoupleapproaching
retirementcanmakeistobetooconservative.Whileit
isimportanttonottaketoomanyriskswiththepool
of money that needs to last throughout your lifetime,
investingtooconservativelymaymeanthatreturnsare
quitelowandfundsmaybeextinguishedsoonerthan
wouldhavebeenthe case if a more balanced approach
hadbeentaken.
3
Invest in your education
Whether it’s a short course, a certificate, a trade
qualificationoradegree,investinginyoureducation
andthenapplyingthatknowledgeintheworkforceis
oneofthequickestandbestwaystoearn more income.
4
Get cracking on a budget
Understandwhereyourincomeiscomingfromand
sortoutwhereitisgoing.Shoparoundforbetterdealson
insurance, gas, electricity, phone and data plans, groceries,
etc.Ifyouhaveamortgage,touchbasewithyourlender
toseeifyouareonthebestinterestrateitcan give you.
5
Trynottogetinto“bad”debt
Itcanbetemptingtoborrowtobuythethings
youwantbutcan’taffordrightnow–beitthose
clothes, that surround-sound system, the holiday, the
new car. Borrowing for these things can be so easy
thanks to credit cards, interest-free loans, personal
loans,etc–butthinkverycarefullyaboutwhether
youreallyneedthemastheycouldendupcosting
you thousands of dollars extra in the long run. For
those with “bad” debt already, focusing on repaying
it is usually the most appropriate investment strategy.6
Choose appropriate investments
Yourinvestmentdecisionswilldependonyour
timeframeandtoleranceforrisk.Forthosewitha
shorttimeframe,cashandfixedinterest(forexam-
ple, term deposits) are usually the most appropriate
option.Forthosewithalongertimeframe,more
growth-basedinvestments(propertyandshares)
maybeappropriate–usuallyviaamanagedfund–
as they provide a more diversified exposure to the
assetclassthatreducesinvestmentriskatalower
initial investment (sometimes as little as $1000).7
Consider seeking advice
The fees may seem high but a good certified financial
planner (CFP) can assist you with defining and prioritis-
ing your goals, budgeting, debt management, investing
intherightassetallocation/investmentspreadgiven
your goals and risk profile, structuring your finances
for retirement and potentially assisting with Centrelink
benefits. The Financial Planning Association is a good
placetostartlookingforaplannerandfindingout more
about the basics of finance. See fpa.com.au.Catherine Sharples-Rushbrooke is manager at Advice
Services Australia. She is a certified financial planner
and an SMSF specialist.