Ask Noel

Each week, financial adviser and international best-selling author Noel Whittaker answers your questions. noelwhit@gmail.com.

Please clarify information regarding the increase of the concessional super cap to $35,000. I turn 59 on June 28 and would dearly love to increase my contributions to $35,000. My financial adviser says I have to wait until I am 60.

The increase in the concessional cap applies to the 2013-14 financial year, and to people aged 59 as of June 30, 2013. The idea is to simplify the age treatment - obviously anyone who is 59 before June 30, 2013 will be 60 for the financial year ended June 2014.

Is there a "rule of thumb" for how much you should pay for financial advice? I'm in my mid-20s and starting to get serious about my finances, which includes employing a financial planner. Some companies I'm meeting with are charging almost $10,000 a year for their services, which seems steep. I earn $70,000 a year and have the same amount in savings.

A professional financial planner is required to spend considerable time getting to know you, and then even more time preparing and implementing a full plan, called a Statement of Advice, for your guidance in the future. The initial cost of this should be between $2000 and $3000 if your affairs are not unduly complex. Ongoing costs are a matter for negotiation between you and the planner, but a figure of $330 to $440 an hour is probably reasonable. As well as technical competence, good communication is fundamental to the client-planner relationship. Keep in mind that the upfront and ongoing fees can often be paid on a pre-tax basis and should show a tangible benefit for you within a few months of implementation.

I am 55, my husband is 60, and we have one child. We run our own business earning a combined income of $145,000 a year. We own properties to the value of $1.9 million, with liabilities of $44,000. Our rental income totals $31,000. We have $230,000 in cash, $278,000 in super, $150,000 in shares, and $250,000 cash in our business. My husband would like to retire in the next five years. Should we be putting more money into super? I have considered buying a property to offset my personal tax bill - $200,000 of the cash is in my name. Do you have any recommendations for managing our finances?

At your age, lack of access is not an issue so I would certainly be ploughing as much money into super as possible. Buying a property won't save you much tax when the income from that property is taken into account. For example, if you borrowed the entire purchase price of a $500,000 investment property returning 4 per cent net, the income would be about $20,000 and the interest would be about $30,000. The tax savings would be no more than $4000 a year. You are extremely well placed for retirement, the main thing is to make the right asset choices inside super.

Listen to Noel Whittaker with Denis Walter on 3AW at 12.45 Mondays.



The explainer

Diversification is not going backwards

We are married, in our early 30s, have total earnings of about $280,000, own our apartment valued at $750,000 and have $450,000 in cash. We have no debt. We would like to upgrade to a house for about $1.2 million, and are also planning to start a family, which would mean a single income. We could buy a home outright, with a small amount of debt for renovations, or do something more strategic to build our future - but we really need a house. I'm concerned investing all our worth in the house will put us back to square one. Your opinion would be very much appreciated.

I certainly don't agree that buying a well-located house with minimal debt is going back to square one. You would be acquiring an asset that would give you free rent for life and a comfortable lifestyle. You are young, with a good income, and the next step after acquiring the house might be to take advice about borrowing against the home for a good share portfolio. This will give you diversification and some tax benefits - the beauty of shares is you can borrow to a level that suits your situation.