What investments should I buy for my newly born granddaughter?

The whole idea of offering tax concessions to save via super is to give people money to spend in their retirement. You have obviously used these to your benefit and should have a very comfortable retirement with your combined $1.6 million in mostly tax-free savings without relying on hard-pressed taxpayers’ money. Like me.

I’m 62, with nearly $400,000 in super, no debts, and would like to retire soon. My wife is a little younger than me but is in her dream job and plans to work at least for another 10 years or more. She, however, has very little super having run her own business for many years and not being in the financial position to make any contributions. Due to a very generous inheritance, I have $100,000 to invest. Considering our situation with me likely to retire sooner rather than later, what could be the best way to go with that money?


You don’t have enough in super to see you through to a ripe old age, so the inheritance should be added to a super fund. The question is: whose?

Eventually, you are likely to apply for an age pension, and you will be eligible to do this when you reach 67, in five years’ time. Then, your super, whether in pension phase or not, will be counted by Centrelink’s means tests while your wife’s accumulation account will be ignored until she, too, reaches 67.

The crucial figure is your wife’s income, which you don’t mention. If it’s lower than the income test’s current top threshold for couples ($3431.20 a fortnight or $89,211 a year, indexed each March and September), you will be able to maximise your part-age pension at 67 by putting the $100,000 into your wife’s super.

If in fact, she is earning above that threshold, then you can forget about an age pension for at least 10 years. If you can live on her income, add the inheritance to your super fund (using some to top up your employer’s super to claim a deduction this year, or alternatively using salary sacrifice) and let it compound until your wife retires.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Investors should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. All letters answered.

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