We have $200K sitting in an investment loan offset account, should we keep it there, invest in shares or add to super? We would like to retire in 15 years.
- Question from Lyna in Kellyville, NSW
Top answer provided by:
Firstly, congratulations on being mindful of this decision – people often feel rushed to decide when they have a large sum of money in their hands.
The three options you have provided could all be the right place for the money, and they could also be the very wrong place for you to invest the money.
The first thing you need to do is start to think about three things;
- What are your guys/what do you want this money to help you achieve?
- What are your weaknesses/blind spots when it comes to money?
- How does the thought of that money fluctuating up & down make you feel?
The first question will help us understand if the goals you want this money to achieve are short or long. Starting to think about this will help decide where the money should go.
If the goal is in the short term (up to three years), that will likely change where & how you invest that money. If there is a retirement goal you want to tackle head-on with this money, it’s more likely that super could be your ally.
The second question will help you realise if you should or should not be doing with that money. Many clients I have sat down with, follow the advice of an expert or a money book they have read – but those never consider your situation.
Some people are happy to have large amounts of money in their offset accounts, others would prefer to pay the debt down or invest it elsewhere, so they don’t have access to it.
I achieve the most significant things with money when there is forced scarcity. If I have less at my fingertips to spend, the outcomes are more consistent. That leads me to a simplistic structure of;
- Have enough in our ‘bills’ account for the next three months – you need to know how much it costs you to live before you do this
- I have a buffer of another three months of living expenses sitting in an account that I can’t easily access
- I invest the additional funds consistently and in an automated way
The third & final question will help you become more aware of your ‘risk profile’ (financial planner jargon) for the risk you are comfortable taking with your money.
If the thought of your money dropping by 40% over the next six months isn’t something you can cope with, then that makes your decision a bit simpler.
If I were you, I would get advice. $200,000 is an amount that could really change the needle on your financial future. So getting it right is incredibly important.
I hope that helps……
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