How to invest $20,000 each year

Sam and his wife both work full-time and hope to retire in three years. They are saving $20,000 each year and have asked finance guru Noel Whittaker how best to invest that money.

Q. Sam
My wife and I hope to retire in a few years. We are both aged 65, are paying off a mortgage and working full time. We manage to save a reasonable amount after household expenses and  wish to purchase shares as private income in our eventual retirements. Jointly, our superannuation is worth about $300,000 and is currently doing well in an industry super fund. So given that we will have about $20,000 to invest each year over the next three years, should we limit ourselves to Australian shares, or should we consider international stocks as well for higher growth?

A: Your super fund should have a good mix of local and international shares, therefore you can have international exposure inside your super fund without trying to pick stocks yourself.  The simple strategy may be for each of you to contribute $10,000 every year as a tax-deductible additional superannuation contribution. Just keep in mind that the limit is $25,000 a year for each of you, and this includes the employer compulsory contributions.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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