Ask Noel
Sydney Morning Herald
Wednesday March 16, 2011
I'M 55. My partner and I have a property worth $690,000. I have a $205,000 mortgage on the property, fixed at 8.2 per cent until 2013 and my partner has a mortgage of $240,000. My income is $500 a week gross. I also have $140,000 in savings and $20,000 in super. Should I pay $50,000 off my loan and invest the balance in shares or the super fund?If the loan is fixed it may be impossible to pay any money off it until the fixed rate term expires (confirm that with your lender). I fail to see the benefit of placing money into super because you are in the 15 per cent tax bracket on your present income but if your partner has a high income it may be worthwhile considering salary sacrificing as much of their income as is possible. If this causes a shortfall in your overall household budget you could make it up by drawing down on your savings. A benefit of investing in shares in your name is that you would receive an extra bonus from the franking credits due to your low income.I have money in a managed fund which I want to move as it doesn't give me tax-free returns. I want to invest $7000 in a fund that I can add to annually. I want to leave the money to grow for the next 10 years until my children begin secondary school and then pay their school fees with the savings. I've inquired about insurance bonds for this purpose but was told I cannot add to the investment every year without the 10-year term restarting each time I add money. Would it be just as good to pop it into a long-term deposit?You have either been given very bad advice or have misunderstood what you have been told. A major benefit of insurance bonds is that you can make an additional investment of up to 125 per cent of the previous year's investment and still retain the original 10-year term. I suggest you seek a second opinion.I'm a married aged pension recipient with a casual job earning $200 gross a week. My only other income is about $25 a month bank interest. When I queried how much tax I should be paying each year I got different replies from the Tax Office and Centrelink. A friend recently mentioned a pensioner could earn about $26,000 a year without paying any tax at all. Should I have to pay any tax based on the above information?Thanks to the Senior Australians Tax Offset, an aged pensioner couple can receive $26,680 each and pay no tax. As your current income is $10,700 a year and the maximum aged pension that is taken into account is $14,027 a year for a married person, it would appear that you should be paying no tax.Noel Whittaker is a director of Whittaker Macnaught. Advice is general and readers should seek their own professional advice. Contact noel.whittaker@whittakermacnaught.com.au.Questions to: Ask Noel, Money, GPO Box 2571, QLD, 4000, or see moneymanager.com.au/ask-an-expert.My husband and I earn $80,000 a year each and we have three young children. We don't have our own house and are renting, paying $1955 a month. We recently sold some land and now have $60,000 after agent's fees and paying off the loan. Is it better for us to buy our own house using the money from the land as a deposit or should we buy an investment property? The houses in our suburb are expensive, so I'm not even sure we can afford to buy in the area.If you have three young children, location is very important so, if you can't afford to buy in your preferred area, it's quite acceptable to continue to rent while getting a foot in the property market by buying an investment property elsewhere. Just bear in mind the success of this strategy depends on your ability to find an underpriced property with strong growth potential.
© 2011 Sydney Morning Herald