Where should Monica stash her nest egg?

Monica asks Noel Whittaker for feedback on how best to invest her nest egg.

Where to stash nest egg?

Monica has worked hard to establish herself as a self-funded retiree and continues to be frugal. She asks personal finance guru Noel Whittaker for feedback on how she has managed her finances.


Q. Monica
I am a self-funded retiree in my late 50s with a small income consisting entirely of rental income and bank interest. I have no superannuation. But, with a frugal lifestyle and by being very careful, I managed to pay off a house and have a reasonable amount in a bank account to pay for my retirement. 

I usually earn around $18,000 and $25,000 per annum and generally have a small tax bill. I was considering putting my savings into a superannuation term deposit, so that the earnings are tax free when I am over 60. But I have done my sums, and with my meagre earnings a self-managed super fund (SMSF) is not viable.

Also, I found that I would be much worse off financially, as I would pay 15 per cent on my super earnings and, to add insult to injury, the interest rates through some funds are lower than what I am earning in bank interest.

I can't fathom why our Government treats older Australians this way. Why isn't all income tax free for Australians over 60?

A. As well as the 15 per cent tax on earnings, there would be at least one per cent in administration fees with your money in superannuation. Given that most superannuation funds invest at least partly in Australian shares, it may be worthwhile taking advice about simply putting part of your savings into a good share trust. You should get an income of at least 4.5 per cent, and good long-term capital growth, and you wouldn’t have the worry of fees, or even the death tax, as you would when your money is in superannuation.

As far as making income tax-free to all Australians over 60, there would be great difficulty getting that through Parliament given the increasing strains on government budgets.

Do you have a question you’d like Noel to tackle? Email us at [email protected]

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.



    To make a comment, please register or login
    11th Dec 2018
    Re. "increasing strains on government budgets." the pollies themselves with all their rorts, perks, salaries etc are the root cause of that problem; and their underlying public servants !!
    11th Dec 2018
    Disappointing to those of us in similar situations that have money in super! Not the greatest place to parkvit then? We are sucked in to it by salary sacrifice thinking it's helpful but hard call by the sounds of it! Only the wealthy are allowed to get wealthier not the battlers!
    11th Dec 2018
    There are several aspects of both question and answer that seem misleading to me.
    If money in super is converted to a pension after turning 60 then it is tax free.
    I don't understand the obsession with fees. Different options should be assessed on net returns. I don't care what fees I am paying if my net returns are better. Super often provides a better return than direct investment - just comoare the net return (which for a super fund is also after tax, so you don't need to worry about that either)
    12th Dec 2018
    I agree - the Question provides insufficient information to obtain any sensible advice, and the Answer is very limited and misleading, especially suggesting a strategy to get a pathetic 4.5% return, when returns could be much better without taxes through Super.

    Also, agree with Cowboy Jim below - the whole strategy seems defective i.e. why she is settling for a meagre income and not aiming for at least a part pension. She should get real Financial Advice (paid for), after a quick check with a Centrelink FISO about possible options.
    Poor response from Noel - probably not interested, other than to show his face.
    11th Dec 2018
    I think anyone that has $625,000 in the bank and is a self funded returee is doing ok and need not worry about being fugal.
    11th Dec 2018
    Really? You're an expert with a crystal ball then? You can predict future expenses, how long someone will live, future health and care needs, and the economic conditions that impact investment returns?

    I'll bet you are a pensioner, ozrog?

    12th Dec 2018
    Why anyone of that age wants to continue with rental property to get a meager income beats me. At 60 I got rid of a rental house, spent the money by upgrading our current place as well as living expenses till age 65 and now getting a part pension. No more hassles with tenants, tax departments and so on. Centrelink was helpful by offering free seminars for people in our station in life. The reason we are on a part pension now.
    15th Dec 2018
    The question included putting the funds in super TERM DEPOSIT, not shares or anything else. My super fund doesn't charge fees for TDs as suggested by Noel.

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