QUESTION:
I managed to earn about $50,000 net a year in the past 10 years or so as a freelancer. But as with all freelancers, I don’t know how much I'll earn this year or next.
After paying up the mortgage in both of our names, I've been contributing the maximum allowed to my super, which now holds $500,000 in a balanced fund.
My partner is working for the government, earning $80,000 gross a year, and is contributing the maximum 10 per cent to a defined benefit scheme.
We have about $250,000 spare cash in a term deposit, and no debt. We're wondering if we should purchase an investment property worth up to $900,000 to "diversify" and take advantage of gearing, or is it too late at our age (both 56)?
If we do purchase one or two properties, should they be in my partner's name or in both names?
ANSWER:
I’d be very wary about buying an investment property in this overheated market, and at 56 you’re getting a bit late for gearing.
In any event, on your tax brackets, gearing won’t save you much tax. I think you need to sit down with a good adviser, work out exactly when you want to retire, and how much you’ll need then.
You seem to be better placed than most, and I’m concerned you might go backwards if you venture into property. It is important to have a good asset mix within your superannuation.
