I am 52 years old and single. I own my studio apartment and have $400,000 in super plus $40,000 in savings. I expect to make around $120,000 this financial year, though I’d like to work a bit less. I can save, though my income is a little variable as I am a casual. Should I buy an investment property or buy a larger unit for myself? I’d like to move at some stage, but I’m happy where I am for now.
Congratulations on getting yourself into a solid financial position. Regarding the two investment options you are considering, I think you might be putting the cart before the horse here.
While it’s never too late to start investing, there are a few crucial considerations to keep in mind before you buy an investment property.Credit: Simon Letch
Start by taking some time to determine your goals. You’ve hinted here that you might want to work less, so perhaps one of your goals is to cut back your working hours. Is there a particular age you would like to have the option of retirement?
Perhaps there are other things you’d like to do, such as travel, study, or take up a new hobby.
Once you have clarity around your goals, you can formulate an investment strategy using your savings capacity. Such a strategy may entail borrowing and purchasing a property, but it may also involve making extra contributions to your super, or building an investment portfolio outside of super that you can access before retirement. Embarking on a strategy that doesn’t require borrowing could be desirable given the variability of your income.
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Property transactions entail a lot of costs – stamp duty, conveyancing, and then selling costs at some point in the future. You therefore want to try and avoid any short-term or unnecessary property purchases.
Given you’re quite happy in the unit that you are in currently, I would suggest you stay put. Perhaps you re-evaluate at the point of retirement, when you might have more flexibility as to location.
I’ve just inherited my parents’ home, which I have always lived in, a $50,000 car and $400,000 cash. I currently receive a part-age pension but expect to lose it once the estate is settled. I’m 72 in June, single, and have $650,000 in super with no debts. At my age, can I put the $400,000 into super and then generate income to replace my lost age pension?