Keep in mind that the maximum split for concessional contributions is 85 per cent of total annual contributions.
I am 75 years old and have been living in a house in Melbourne with my wife since 1990. The house was bought for $150,000 and is in my name only. I am preparing a will in which I want to say that the house will go to my wife. If my wife decides to sell the house a few years after my death, will she be liable for capital gains tax (CGT?) If so, what will be the base cost? ($150,000 or market value at the date of death?) Are there any advantages if ownership of the house is now changed to a joint one with my wife?
If the situation remains unchanged, your wife will inherit the house at its market value at the date of your death.
I suggest you talk with your solicitor about the option of changing ownership to joint tenants with your wife. This means the house will go to the survivor automatically on the death of one party and, so, would prevent potential estate disputes down the track.
There should be no CGT and also minimal stamp duty. Your solicitor can work the numbers for you.
In a recent article you said you preferred managed funds for international investing. Just to clarify, did you mean Australian fund managers and why not US mutual funds directly?
The good Australian international fund managers have an excellent track record of beating the benchmark index and, due to the huge research resources at their disposal, should have a better chance of picking winners than a layperson.
Yes, you could pick an US mutual fund and then you would be taking a punt on the currency, and also be faced with horrendous paperwork. The forms required by the US government are almost incomprehensible.
My wife and I are both aged 72, retired, with a reasonable amount in super. We have about 70 per cent in cash within an account-based pension. Our capital has reduced after drawing a 5 per cent pension over the past five years, while earnings have been less. We would like to move more of our funds into a market-based investment option, however, moving now when the market is at a high seems like bad timing. Do we wait for a market correction? Your comments would be appreciated.
Nobody can accurately and consistently forecast the future direction of stock markets. Therefore, you should sit down with your financial adviser and agree on a strategy whereby a certain percentage of your portfolio is kept in market-linked assets that will help you achieve your long-term goals.
If you are especially nervous, you could adopt a strategy of dollar-cost averaging, whereby you invest a set sum of money each month, instead of investing in one lump sum.
For example, if you decided to invest $120,000 you could invest $10,000 a month over 12 months.
If you go to my website noelwhittaker.com.au you will find a Dollar Cost Averaging Calculator that lets you invest a theoretical monthly investment starting at a date of your choosing, and will tell you how much you would have had at a given finishing date, if your investment matched the All Ordinaries Accumulation Index, which includes income and growth.
You may well have another 25 years to live. This is why it’s imperative you have a reasonable proportion of your portfolio in growth assets, which should give the best return over the long haul.
Noel Whittaker, AM, is the author of Making Money Made Simple and numerous other books on personal finance.