Ask Noel

I have been on the disability pension for 15 years.

I have been on the disability pension for 15 years. I am 45 and have $11,000 in the bank but would like to keep a bit in there for a cheap car and maybe a holiday. I can only save $100 a fortnight so wondered if I could buy a few shares every fortnight, or even government bonds. Can you tell me if my situation is viable and if not, can you offer advice on how to proceed?

Congratulations on your money-management skills and your attitude to money. I think the simplest strategy for you is to keep accumulating money in the bank to ensure you always have sufficient to fall back on in need. You could then invest any surplus funds in a quality managed fund that invests in shares. You could start with just $2000 and add to this when funds are available.

We intend to sell our investment property shortly. What would be the base value of the property taking into account selling expenses, a bank loan of $270,000 and renovation expenses estimated at $20,000 to determine capital gains tax?

This is something you will need to calculate yourself hopefully you have kept the records to do so. The base cost will include the purchase price and purchase costs and all items of expenditure, such as renovations since you acquired the property that were not written off each year in the profit and loss account. Obviously, this would not include items such as interest rates and maintenance. Your accountant is the appropriate person to guide you.

My husband and I are 57 and 52. I have $260,000 and my husband has $380,000 in super, invested in the high-growth option, 100 per cent shares. We recently instructed our super fund to allocate future contributions to the conservative option, which is mainly cash. We now have about $10,000 each in this option. I have $100,000 of equity in an investment property and about $230,000 in a defined-benefit super scheme, to which I have been contributing for seven years. We plan to work for another three years full time then two to three years part time, paying the maximum concessional contributions into super. I will continue to contribute 10 per cent of my gross salary to my defined-benefit super. We have considered a self-managed super fund but as we would need to rely heavily on investment and compliance advice, we would only do so if we would be better off. Is it a good strategy to leave our combined $640,000 in our present fund's growth option and allocate our future contributions to the conservative option?

You can eliminate most of the burden of administration and compliance that goes with a self-managed superannuation fund if you engage a firm of full-time super-fund administrators. However, it is the effectiveness of the investment of the assets held by the fund that will determine its performance. If you are not confident in choosing your own shares and property, you are probably better off leaving the decisions to full-time fund managers.

My husband is 70 and I am 65. We are self-funded retirees with a small Centrelink pension. We have some shares, bought last year, which appear to be doing well. I am concerned that when we sell them, we may have a large tax debt. If we were to start a self-managed superannuation fund, could we then sell them and the other shares into the SMSF, and thus have a much smaller tax debt? We are aware that this could also create tax problems in the short term. Should we sell them and then repurchase immediately, thus reducing tax implications when we sell the shares in future?

If your super fund buys the shares from you, you will be liable for capital gains tax. In some cases, it is possible to reduce the amount of CGT by making a tax-deductible contribution to super, but this may not be possible because of your age. Once you reach 65, you cannot contribute to super unless you pass the work test, which involves working 40 hours in 30 consecutive days. The benefit of shares is you can sell them in small parcels so the simplest solution may be to minimise drawing money from your super funds and run down your cash holdings outside the funds. This will mean minimal CGT if you need this to sell any of the shares.

Advice is general readers should seek their own professional advice.

Contact noel.whittaker@whittaker Follow him on Twitter: @noelwhittaker. Questions to: Ask Noel, Money, GPO Box 2571, Qld, 4000, or see /ask-an-expert.

I am 22 years old and recently graduated from university. My parents are going to start charging me rent to live at home. I have about $90,000 and would be happy to invest $80,000. I am currently earning $60,000 a year. Should I purchase my own place rather than throwing money away on rent? I live in Wollongong and there are two-bedroom units available for about $230,000 and modest three-bedroom houses for $400,000.

Remember that rent is not dead money, it is the price of shelter, so you will need to be sure in your own mind that any capital gains you will make if you buy a property outweigh the extra costs you will incur in expenses such as interest, rates and maintenance. You do have a rather big deposit and appear to be a good money manager so buying a house could be a good option for you if you have the skills to find an undervalued property in a good location.

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