YOUR QUESTIONS

I am a widow aged 61. My share portfolio at the moment is worth $120,600 and my cash account is $164,393. I get a widow's allowance of $447 fortnightly and also an English pension of #68 ($105) a week. I also draw $350 a month from my allocated pension. What is the best way to get the most from the cash I have? What is the best way to invest it? I don't wish to buy any shares at this time. K.S.

You are quite right. For now, as China slows and the prices of our main commodities, coal and iron ore, fall while strikes prevent BHP from meeting its exports, and Europeans watch nervously as Greece approaches its elections, I agree it's not a time to buy shares. In moments like this, I love term deposits!

SUPER TERM DEPOSITS BEST OPTION

In the six months to December 2011, we have seen our two allocated pension accounts reduce by a total of $33,630 $17,650 of this was for pension payments and $15,980 was fees and investment "earnings". The two fund balances now total about $550,000. Would we be better off to close these pension accounts and put the $550,000 into a five-year term deposit paying interest monthly? We receive a part age pension of $242.75 each a fortnight and have some good-quality shares worth about $110,000. Would our pension be reduced by moving from a super fund to cash? M.K.

I dislike taking benefits out of a tax-free environment when it is then no longer possible to re-contribute them. Also, term deposits outside of super are fully assessed by the Centrelink income test, unlike allocated pensions, which have a "deductible amount" that is ignored.

Many super funds have, as a result of clients' pressure, introduced term deposits into their super funds, for example Colonial First State and ING, while Defence Bank (formerly the Defence Credit Union) Retirement Savings Account pension deposit offers 5.35 per cent for six months.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: Financial Ombudsman, 1300 780 808 pensions, 13 23 00.