Ten years ago we invested in shares with the goal to have enough money for our children's education. We now have $150,000 in our share portfolio, predominantly geared towards gold stocks. Would we be better served investing in gold bullion or stay with the shares?
I much prefer shares as you have no problems with storage or insurance and they should be highly liquid while producing an income. Keep in mind you are heavily weighted towards gold and your portfolio will fall substantially if the price of gold does.
I'm a self-funded retiree with a spare $400,000 to invest. I have over $1 million in shares and property and want to use this extra cash to generate the best possible capital stable income. What would you recommend? My wife and I have no dependents and no debts.
Your best option is probably blue-chip shares paying high-franked dividends or else managed funds that have the bulk of their holdings in this area. Just be aware that they will bounce around when the market does but should give you good tax-effective returns in the long term.
I'm a 61-year-old retired woman with $450,000 in a self-managed super fund plus $300,000 cash. I own my own home worth $500,000. I want to buy another home, costing $600,000, before I sell my existing home. Would I be able to withdraw $300,000 from my SMSF and then put it back in when my existing house sells? Or will I have to get a home loan for the amount above $300,000 that I need to purchase the new home, including stamp duty, solicitors, removalist etc?
As you are retired you should be able to access your super when you wish and as you are over 60 the amount you withdraw should be tax-free. You are able to contribute money to super until you are 65 without passing any work test so there should be no restrictions on your recontributing the money when it becomes available. Bear in mind the non-concessional caps are $150,000 a year but you are allowed to use the bring-forward rule and contribute up to $450,000 a year. Involve your adviser as there are heavy penalties for making excess contributions.
I am 56 and have retired from full-time work. I want to move to Tasmania and buy a farm worth $1 million. What is the best ownership for tax purposes?
This is a matter to discuss with your accountant. If it is purely to be your residence, it is best to be in your own name to keep the capital-gains tax exemption, keeping in mind the main residence only applies to the dwelling and the surrounding land up to two hectares. If you intend to make it an income-producing property, and so claim the associated tax deductions, you will need to convince the Tax Office you are running a genuine business. In that case, the appropriate structure will depend on your family situation and what assets and income you will have.
I'm 43 and my wife is 41. I'm earning $250,000 and my wife is a full-time student. Our house is worth $420,000 and we owe $236,000. We have savings of $150,000. I'm interested in buying a better home for $800,000 and plan to rent out our current property. Would it be better to pay out the mortgage on the current property and then save for a deposit for another loan, or opt for a home-equity loan on the current property.
There are no additional tax benefits to be had by remortgaging the existing property, so I suggest you convert that loan to interest only to maintain your tax benefits once it is rented out. You should then focus all your resources on reducing the debt on the new residence quickly.
Frequently Asked Questions about this Article…
Should I invest in gold bullion or gold shares for my portfolio?
Gold shares (gold stocks) are often preferable because they avoid storage and insurance hassles, tend to be more liquid, and can produce income. However, the article warns that if you are heavily weighted to gold shares your portfolio will fall substantially if the price of gold falls, so consider diversification and your risk tolerance before switching to bullion or remaining in shares.
What are the pros and cons of holding shares versus physical gold bullion?
Shares offer liquidity, potential income (dividends) and no storage or insurance costs, while bullion provides direct exposure to the metal and may feel like a safer store of value. The article’s view is that shares are generally preferable for ease and income, but concentration in gold exposes you to sharp falls if gold prices decline.
I’m a self-funded retiree with cash to invest — what investments provide capital-stable income?
For retirees seeking capital-stable, income-generating investments the article recommends blue-chip shares that pay high franked dividends or managed funds focused on those holdings. These options can provide tax-effective returns over the long term, though share values will move with the market.
Can I withdraw money from my SMSF to buy a new home and put it back later?
If you’re retired and over 60 you can access your super and withdrawals should be tax-free, and you can recontribute until age 65 without meeting a work test. Be mindful of non-concessional contribution caps and rules before recontributing — involve your adviser because excess contributions can carry heavy penalties.
What are the non-concessional caps and how does the bring-forward rule work?
The article states the standard non-concessional cap is $150,000 a year, but you may be able to use the bring-forward rule to contribute up to $450,000 in a single year. Because rules and penalties apply, the article advises involving your financial adviser when planning large recontributions.
If I buy a farm as my main residence, what ownership structure is best for tax purposes?
For a property used purely as your residence, it’s generally best to hold it in your own name to preserve the capital gains tax exemption, noting that the main residence exemption only applies to the dwelling and surrounding land up to two hectares. If you intend to run it as an income-producing business and claim deductions, you’ll need to satisfy the Tax Office that it’s a genuine business and discuss the optimal ownership structure with your accountant.
What should I consider tax-wise if I plan to make a property income-producing rather than my main residence?
If you convert a property to an income-producing asset you can claim related tax deductions, but you must be able to convince the Tax Office that you are running a genuine business. The appropriate ownership structure will depend on your family situation, other assets and income, so seek professional tax advice.
Is it better to pay out the mortgage on my current home or remortgage when I plan to rent it out?
The article recommends converting the existing loan to interest-only once you rent out the property to maintain tax benefits, rather than remortgaging for tax reasons. It also suggests focusing your resources on reducing the debt on the new residence quickly.
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