Super advice for a dad in debt

IF you have a burning money question, or you want to win a fight with your spouse, shoot over to Barefootinvestor.com and ask a question.

Work towards paying off debt.

Q

G'day Barefoot,

I have only recently come across your work and am after a bit of advice for my dad. He is 57 and works in a manual job that pays between $600-$800 a week depending on overtime.

He has a personal loan of $20,000, which he has had for 10 years, not much in savings and about $75,000 in super.

I am after some advice as to whether he should be focusing on tipping as much into super as possible or putting every spare dollar into paying down the loan, which at the moment with current repayments will be paid off when he is 63.

Any advice is much appreciated.

Chris

A Hey Chris,
Your old man needs to sell whatever he can to get rid of the personal loan. pronto. Then he needs to look at taking a customer service or sales course so that he can work in a less physically demanding job. - a full-time gig at Bunnings would be perfect.

Finally, he needs to start chipping money away into his superannuation - and taking advantage of low-income perks like the government co-contributions scheme.

Oh, and he needs one more thing - someone other than you to give him this advice. You can't do it. Few parents listen to their kids when they lecture them about money (it must be something to do with changing your nappy?).

What'll make it harder still is it sounds like your dad has spent his adult life squandering his money - and those chains are difficult to break. If he wants to pull himself through he will - but he's a grown man, and you need to let him make his own bed - and lie in it.

International Shares

Q Hi Scott,
Are you able to confirm the best way to have exposure to international shares through the ASX in a similar way
that you do through Argo Investments on the Australian market?

Daniel

A Hi Daniel,

You can get exposure to 100 of some of the biggest companies in the world in one single share: the iShares 100 Global ETF (Exchange Traded Fund). It's listed on the ASX and can be purchased the same way as any other company listed on the exchange. The ticker code is ASX: IOO.

The iShares 100 Global ETF gives you exposure to many of the world's biggest companies, such as like Microsoft, Exxon Mobil, General Electric, Johnson & Johnson, IBM, Toyota, Coca-Cola, McDonalds and Sony. (plus of course another 91 other companies!).

There are two reasons why this is a smart investment: first, many of these companies are old and profitable - and they're now able to take their hard-won experience and apply it to the booming Chinese market.

And second, the iShares product charges 0.40 per cent per annum management fees - which is around 80 per cent cheaper than most actively managed international share funds. The less you get frisked with fees, the higher your returns.

Friendly Finances

Q Hi Barefoot,

Five friends and I are taking turns giving each other $750 a fortnight such that - during each turn one person receives $3750 after every 2½ months.

If I add my own $750 contribution during my turn I can have $4500. I am looking to be investing these amounts in something with good returns in a bid to serve for a house deposit in the near future. Where would you recommend I put it?

Thanks for your help.

Milo

A Hi Milo,

This is the strategy my mates employ when we're at the pub. Though I've never heard about anyone doing it with their savings (so keep your mates close - the last thing you want is them to duck out when it's their shout).

As far as where to put the $4500 I'd suggest you keep $2000 in a high interest online savings account (which I call Mojo), and put the $2500 either in a First Home Saver Account (FHSA) if you don't have a house, or into a Listed Investment Company like Argo Investments (ARG. ASX). Finally, I'd look to set up a direct debit from your account for $750 each time you're paid - leave your mates out of your finances.