What’s the best way to invest after landing your first good job?

My son has a grad role with a big mining company paying $100,000 and will be moving to the mine site next year. I’m encouraging him to put as much into super as he can so that he can enjoy compounding interest later in life. Apart from his HECS debt, he will have little expenses. What would you recommend for him to do over the next five to 10 years?

Congratulations. I’d imagine there were high-fives throughout the household when he locked that in. That transition from study to the workforce is the tough one. Once he’s got some experience, he’ll hopefully be set for the rest of his working life.

Setting aside money to have some great experiences is a worthwhile investment.Credit: Simon Letch

Your tip with regard to superannuation is a good one, though I suspect your son isn’t too concerned about retirement at this phase of life. A better selling point might be to show him the First Home Super Saver scheme. This scheme allows him to draw back out voluntary contributions that he makes into super to use as a deposit on his first home. It’s a great scheme and I suspect more likely to motivate him towards adding to super than having extra financial comfort in his 60s.

Other things to do are to build a cash buffer to provide a safety net in case of unexpected large expenses, or a period of unemployment. From there he could do some investing in his personal name, so that the funds are accessible as needed.

Most importantly though, I hope he’s able to set aside some money and have some great experiences. Travel can be pretty cheap when you’re young, and the memories last for decades. There’s a balance to be struck, but broadening your perspective and meeting people from different cultures is rarely a poor investment.

I’m 66 years old and renting. I hope to work until I am 70. I’m worried about my long-term security. Despite being university educated and working all my life, as a sole parent with a few health setbacks along the way, I’m not in a strong financial position. Currently, I have about $160,000 in super.

My daughters have suggested perhaps buying a unit that they could then rent to me, with the rent covering their mortgage repayments. This would at least ensure I have a guaranteed place to live. What issues should we consider with this plan?

Thanks for your question, I’m sure this issue has been causing you considerable stress.

If your daughters have the capacity to acquire a property for you to live in, that would certainly be a great outcome. You would qualify for rent assistance as part of your age pension entitlement, so your out-of-pocket costs for securing a roof over your head would likely be manageable.

By the time you reach 70 years of age, your superannuation savings are likely to be about $230,000, assuming standard employer contributions. You could draw approximately $14,000 a year from this pool with minimal risk of the balance running out in your lifetime.

The age pension plus rent assistance is likely to be approximately $34,000 a year. In combination then you would have $48,000 a year to spend once retired. While this won’t be enough to be cruising around the world, it will hopefully be sufficient to provide you with a comfortable retirement alongside a secure home.

Between now and retirement, boost your super where affordable, and ensure it’s not invested too conservatively.

Paul Benson is a certified financial planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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