Hi, I finished up with my employer of 18 years yesterday and have a good sum of money to invest. What options are there to get a reasonable return instead of the money sitting the in the bank?
I guess it depends on your whole financial position, your life stage and your goals and expectations for your future.
If you have a mortgage you can immediately earn 4% tax free by putting into the loan or an Offset account.
If you don’t, then the options range from High Interest Savers accounts at the safe end through to speculative investments at the other.
I would suggest sitting with a financial adviser would be beneficial and worth any upfront fee you need to pay.
Best of luck
There's obviously a lot of things to consider when looking making a decision such as this.
If you are investing it, you need to decide on the most appropriate structure to invest this money in. Is it just in your name (with any tax and asset protection consequences), spouses name (with any tax and asset protection consequences), superannuation (with tax, asset protection, preservation consequences, or a company or a trust structure. The answer to this question will very much be determined by your situation and also the investment strategy you do take.
Then, the actual investment. Risk and return are related. If you want to achieve a return greater than cash in the bank, how much risk are you willing to take and for how much return. How much risk do you NEED to take. I believe diversification is important. Don't just invest in 1 asset class (invest across Australian shares, international shares, fixed interest etc) and don't just invest in 1 or 2 assets within the asset class, diversify away any singular asset risks.
That being said, some ideas that are typical solutions for people would be - use the funds to pay down your home loan (if you have one), then if appropriate, redraw an investment loan and invest those funds (that way you have reduced the non deductible loan and now have tax deductible investment loan). Alternatively, if you have no home loan, you may look to invest in your name or your spouses (if you have one), with whoever has a lower marginal tax rate. You might also look at contributing to superannuation, keeping in mind non concessional contribution caps of $100k per annum (or up to $300k in one go by bringing forward your next 2 years contribution cap as well) but I would only be going down that path if you have paid off your mortgage, are nearing preservation age and don't have yourself or your spouse with a NIL marginal tax rate - I have clients with spouses who don't work so why would we want to make additional non concessional contributions to superannuation where you are taxed at 15% where you can invest in the spouses name at 0%. Obviously, pre tax (concessional) contributions are still going to be appropriate if you have taxable income.
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All the best just some more food for thought !