You're never too young to start an investment plan

SCOTT Pape answers your questions on saving, investing, buying property, superannuation and getting married.

Starting to save at a young age is a great investment in your future.

Retirees, Three Times Lucky?

My wife and I are both 55 and for the first time ever, we're focusing on retirement. Here are our details: I earn $80,000 and my wife earns $50,000. We own our home, worth approx. $600,000. We have three super funds with $130,000, and $80,000 in our Mojo (savings) account. We want to have $60,000 in income each year in retirement.

Thanks,

Derryn

Hey Derryn,

To have $60,000 income in retirement, you'll need about $1 million in investable assets when you retire. Now you've paid off your home, you should be able to live off your wage, and contribute your wife's wage into super. Consolidate your three funds into one, low-cost industry fund each, and talk to them about setting up transition to retirement pensions. Do this and you'll come very close to $1 million in super within ten years.

Young Donald Trump

I'm 14 and looking to establish a property portfolio when I'm older. I'm currently banking my money in a saver's account, which has an interest rate of 3 per cent per annum being paid monthly (If $10 or more is deposited and none is withdrawn for the month). Could you suggest a better way to invest at my age?

Thanks

Nick

Nick, you and I would have been great mates in high school!

Take your money out of that kids' account you've got it in. Those things are essentially marketing gimmicks that are aimed at parents who don't read the fine print.

You can own your own property empire sooner than you think. When you have a $1000 saved up, ask your parents to purchase units in the BWP Trust (BWP. ASX). Then you'll be a part owner in 67 Bunnings Warehouse properties. They pay much higher rents than an investment property, and you'll have professional managers looking after the buildings and collecting the rent.

I'm betting most of your friends are much more interested in Grand Theft Auto than they are in building an investment portfolio. Yet in twenty years time, when you're on a date, which will be more impressive? Trust me - play the long game.

Shutting down my SMSF

My husband set up a Self Managed Super Fund (SMSF) before he died in 2008.

It's currently got $750,000 invested in it. However, I'm tiring of 6-monthly adviser meetings! How hard is it to close SMSF? Are there fees, do I pay tax on taking it out?

Thanks,

Shirley

Hi Shirley,

You've got a decent whack in your SMSF, so it's cost-effective to run your own fund. However, as you've identified, there's a hassle factor. Being the trustee of your own Self Managed Super Fund (SMSF) can be a giant pain in the rump - especially if you're not interested in, well, managing your super.

In that case it makes sense to turn over the management to a professional trustee and administrator, via a very low-cost industry fund. Though before you can do that you'll have to wind up your SMSF, which can be a bit of a bureaucratic nightmare. Essentially, you'll have to transfer all your assets out of the fund and that can trigger unintended tax consequences. Seek advice from your accountant as to how to limit these.

I'm in a Partnership with my Partner

Hi Barefoot,

My partner is in the enviable position of earning too much money and being not too sure what to do with it. She earns $150k per year (we keep our money separate) and has roughly $25k in savings, with no debts.

We rent because we don't want to buy our own home until we can go 50-50 on the deposit. We're also debating whether to buy a negatively geared property for tax purposes or if there is a better option?

Thanks,

Craig

Hi Craig,

I wouldn't buy a house with a partner that I wasn't committed enough to share my money with (and I wouldn't commit to sharing your money with that person until you're married). Until then, I'd do exactly what you're doing now: stick to renting together, invest in your own name, and make plans only after you're married.