Ask Noel

Congratulations on your awareness that it is better to start an investment plan sooner rather than later. Your next step should be to talk to an adviser with the aim of making a long-term plan for your future. The adviser should be able to help you decide when you want to retire, how much you will need then and what strategies are available. There are a wide range of managed funds for people who are not comfortable choosing their own shares and the adviser will help you.

What alternate reality are you living in, Noel, with your $12 per $1000 a month home loan repayment rule? Firstly, $400,000 is not going to buy any more than a small unit in Sydney a loan of $500,000 plus is needed for a decent family home. Using your rule gives optimal repayments of $6000-plus a month ($72,000-plus a year) more than the average NSW income. Then you have the audacity to conclude with the statement "any spare funds can be directed to investments". How should an earner on an average income meet your rule when they struggle to meet the minimum monthly loan repayments? Not everyone is on a six figure salary.

Your statement assumes everybody owes 100 per cent of the value of their house. There are many people who have relatively small home loans due to a variety of reasons that include downsizing, fast repayment of debt because of two incomes, marital break-up or being in receipt of a legacy. The question for them is whether to start an investment plan immediately or hold off until their house is paid off. Because of the way compound interest works there is little interest to be saved by speeding up repayments once the loan term is down to 10 years. People who are fortunate enough to be able to pay $12 per $1000 a month on their loan are better off to leave the payments at that level and take advice about borrowing for investment.

I'm under the impression that as soon as one turns 60 one can freely withdraw from super. Is this correct or are there conditions that have to be met, such as one should retire from work?

You can withdraw your super freely once you reach 65 but at 60 you have to trigger a condition of release. To do this you have to resign from a job. It needn't be your main job. Of course, a person aged 60 could stay in their present job and access part of their super as a lump sum by use of a transition-to-retirement pension.

We have just built a new property and, unfortunately, have to move for work reasons. We've never lived in it but expect to move in after two years of renting it. Will we be eligible to claim the property as our main residence and avoid CGT?

If you rent the property and then move out of it you will be liable for CGT on a pro rata basis according to the time it was rented out. But if you move into it for a while before you rent it out you will be able to be absent from it for up to six years without losing the CGT exemption, provided you do not claim any other property as your principal residence in that time.

This article is general in nature. Seek further advice before making financial decisions. Noel Whittaker is a director of Whittaker Macnaught, a licensed dealer in securities.

Questions to Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.smh.com.au/sitewide/askanexpert.html.