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Super or investment property? Should I see an adviser?

I am 35 years of age, married with two kids at school and my wife has gone back to work. Our combined gross income is around $180,000 and as we have been in the same house for about 10 years we are covering our home loan repayments pretty comfortably. I want to know should I pay off my house quickly, increase the money I have in my super using salary sacrifice or buy an investment property? I also would like your advice on whether I am someone who should go to an adviser now? And if so, what would I be expected to pay?
A great question and it’s being asked at a time when many people of your age ponder what is the best way to build wealth. The three questions you posed are the three many people consider, but there could be other options such as rolling your super into a self-managed super fund, getting some serious tax advice, as well as planning, or maybe all three options could be considered. As I don’t know your exact situation, I can’t advise you but the more complicated your life and/or the more free money you have, the more likely it is that you should find a trustworthy adviser to go through all of your goals and then work out if you’re on track to make it happen. I recently came across an accountant/financial planner who looked at a couple’s circumstances and made the assessment that their $350,000 tax bill could be reduced by more than half, legally. He charged $20,000 for the advice and of course they paid it and they have retained that guy as their adviser ever since. And that raises the question I have for many people when they tell me that they can’t afford an adviser. I ask: “Can you afford not to have an adviser?” Not all of us can change our tax bill by a factor of half of $350,000, but many of us might be able to halve a $30,000 tax bill. An adviser might be able to turn a negatively geared property into a cash flow positive investment and similarly, an adviser might be able to increase your investment returns, reduce your tax bill and build your wealth more quickly by simply knowing more rules, regulations and investment products. Some people benefit from having an adviser they see each year, while others might go occasionally when big money decisions are to be made, but I think many people don’t know what they’re missing by not looking into financial advice. And I think money ignorance isn’t bliss, it’s bloody costly.

One final point — be careful of advisers who promise the world and charge the world. If the returns look massive, then so might be the risks. Generally, a good adviser can show you what happens if you do nothing and what happens if you take advice. An adviser’s greatest assistance might be to keep you on track with your plans, where if you were left alone, you could make decisions that could cost you a lot in the long run. I know I had clients who wanted to go to cash in late 2008 as they were sick of the falling stock market. I had long handholding conversations with some of them and they were really happy in March 2009 when the market rebounded.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: 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. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. 

Published on: Friday, April 30, 2010

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