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What's the best super strategy for me this year?

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I am currently purely in term deposits in my self-managed super fund and they will soon rollover after being locked away for a year. What do you think of this strategy for the year ahead? Do you have any other ideas as I am 55 with $520K in my fund and I want to retire when my fund hits $1 million? 

My first tip is to remember, and everyone better note this, if you don’t nominate what you want to do with your term deposit before the final day or within a prescribed time, the bank will roll into a similar term deposit but of a lower interest rate! And yes that can happen even if rates go up! So the date when the rollover nomination must happen is an important date and should not be missed. Now, with regards to your term deposit strategy, I think it is time you thought about changing it unless you want to work until you are 65 years of age. My figuring was that if you stuck with term deposits your average return, if you’re lucky, will be 6 per cent. Dividing this into 72 means it will double in 12 years, which means you would be 67, but you will have 10 years of putting more super in and so I took two years off and put a guess in for tax. By putting say half in term deposits and getting 9 per cent from a portfolio of shares selected for their dividends, your million dollar figure would come quicker. By the way, this is a pretty conservative investment strategy for a guy who’s 55 and I reckon you could easily put 65 per cent of your dough in good dividend paying stocks and the rest in term deposits. I know you might want to retire before 65 with a million dollars but on average men are now living into their early 80s and so you will have to work out how long your million dollars will last if you’re ‘unlucky’ enough to live a long time and outlive your super!

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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: Monday, April 30, 2012

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer, Roger Montgomery, Paul Rickard and Charlie Aitken the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

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