Question of the week – pre-retirement assistance needed

Print This Post A A A

Q: I’m about 18 months off retiring. I currently have $700,000 in an SMSF (50% Australian shares with balance in cash). I have left it in cash for far too long and am now buying more shares. I’m thinking of selling a Sydney investment property, as costs associated with renting seem over the top (probably spend $10,000 on costs out of the $50,000 income plus there is loss of rent between tenants). After I’ve paid out the mortgage and CGT, I was planning on putting the remainder in my SMSF. Not sure then whether too much in shares and although my focus is playing safe with high dividend quality Australian stocks, I wonder if there’s a danger of putting (nearly) all my eggs in one basket.

A: I don’t know whether you have been down this path already or not, however I think you might wish to consider seeing a financial adviser. You are contemplating some fairly key moves – and getting a structured plan around the strategy might be a really good investment.

Prima facie, your SMSF is going to be a pretty tax-effective vehicle to hold your investments. As soon as you turn 60, you can draw a pension tax free – and the investment earnings within the fund are going to be tax free.

Depending on your risk profile, need for income in retirement, assets outside super etc, you will want some sort of balance between shares, property, fixed interest securities etc. This balance is going to have to be particular to you – and probably needs to be modelled. This is one thing a financial adviser would be able to do for you.

In terms of the specific shares, have a look at our ‘income oriented’ and ‘growth oriented’ portfolios for some ideas – particularly around the approach to sector weightings. Another alternative is to consider some of the major listed investment companies, such as Argo or AFIC (ASX codes ARG and AFI), and leave the stock selection up to them.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

Also from this edition