Ask Noel

This can be a confusing area because an option styled "cash" by one super fund may contain quite different assets to that of another fund. There are options with names such as "Capital Safe" and "Enhanced Cash" that may invest part of the portfolio in high-yielding shares that provide tax benefits and the chance of capital growth. But any investment that offers capital growth leaves you open to capital loss. Be guided by your adviser because it's important to look at your super as an integral part of your total financial assets and make sure the overall allocation is in line with your risk profile.

I started a portfolio of managed funds a year ago that is funded equally by my own money and a margin loan. I have no immediate needs from the portfolio except that it earns enough to service the loan's interest, which it once did. However, I now find I have to fund the interest repayments myself unless I redeem part of the investment, which would push me even closer to a margin call. While I have some cash reserve to top up the portfolio, the interest on the loan is now beyond my capabilities. Do you have any suggestions on how to solve this problem?

Unfortunately there is no easy answer but if you own a house with substantial equity you could apply to your bank for a home-equity loan to take out the margin loan. This would free you from further margin calls and then in an emergency you could sell part of your investment to make interest payments. The interest is tax deductible so it may be possible to reduce the PAYG tax that is being deducted out of each pay. This will give you more in your pay packet but, of course, means a lower tax refund at the end of the year.

Suppose you have a credit card that is used for private and investment-property expenses. If you added up the itemised expenses on the statement for the investment property - council rates, insurance, land tax - and then made a payment from the line-of-credit loan, would the payment be considered a private or investment expense?

You are borrowing on your line-of-credit to pay for genuine deductible investment expenses and this will not put the tax deductibility of the line-of-credit loan in jeopardy. It is no different to a business using a business overdraft to recover expenses such as air fares that have been billed to a credit card.

I'm 58, plan to retire between 60 and 65 and have $160,000 in a balanced super fund. I'm salary sacrificing $500 a week. I have $200,000 in a term deposit and no debt. Is it best to stop salary sacrificing now until the economic situation stabilises and start again when things improve?

The benefit of salary sacrificing is you are losing just 15 per cent of any pre-tax dollars that are contributed to super whereas money taken in hand loses at least 31.5 per cent. I'm in favour of salary sacrificing into share-based investments but if you are cautious you could ask your fund to put contributions in the cash area.

This article is general in nature. Readers should always seek further advice before making financial decisions.