Personal Finance
Newcastle Herald
Thursday February 28, 2008
Q I am 36 years old and have $36,500 in superannuation. My fund provides various investment options and I can choose to invest in one or a combination of the investment options, and in the proportions I want, and can change this weekly online at no cost. I have the whole balance invested in Australian shares. Given the volatility in the Australian sharemarket at present, should I consider changing my investment mix? My account balance has decreased by more than $2000 in the past few months despite employer contributions of $512 a month.
A As you are only 36 you should have at least 50 years investing ahead of you. Therefore, I would stick with the Australian share option as the present fall in the market is allowing you to buy them much cheaper than you could have a few months ago. You'll be pleased you did so when the market has its inevitable recovery. Q My husband and I have three children, and we are in serious need of budgeting help. No matter what we do, we never seem to have enough money to go around. I was wondering what the best way to obtain budget assistance is? Do you think a financial planner is appropriate for us? I think we need someone to show us what we are doing wrong.A The job of a financial planner is to advise on investing surplus funds or the use of strategies, such as borrowing to invest. What you need is a financial counsellor. You can find them in the Yellow Pages under Community Advisory Services.Q I work full-time in a salaried job but have been making an extra $20,000 pre-tax a year from transactions on the stockmarket. Can I treat this as income and salary sacrifice it into my super? If so, what is the limit I can sacrifice?A If you are a share trader, any profits will be taxed as ordinary income, but you cannot place them into super and claim a tax deduction as your employer is almost certainly paying superannuation for you now. A way out is to salary sacrifice a big chunk of your employer income and make up the shortfall with your trading income. Just bear in mind money in superannuation is inaccessible until you reach the age of 55 and retire.Q We owe $100,000 on our home worth $440,000. We also owe $554,000 on an investment property which is worth about $500,000 and our net loss after tax benefits (negative gearing) is still another $11,000 a year. We have about $100,000 redraw available on our own home. Should we cut our losses and get rid of the investment property, move our redraw from our current home to the investment home and lower the monthly payments on that, or sell our home and move into the investment property, transferring across the $300,000 or so that we would get cash in hand from the sale?A If you sell the property you will turn a paper loss into a real one. Therefore, you will need to carefully consider the potential of the property and decide if it's worth holding or whether you are better to cut your losses and get out now. This is an important decision for you because moving into the property is only a short-term fix if the property has limited prospects for capital gain.email questions to noelwhit@gil.com.au
© 2008 Newcastle Herald