Ask Paul: I have five years left to live, how should I provide for my family?


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Dear Paul,

My wife and I are 79 and 84 respectively. I have only five years left, according to medical advice. We have recently downsized to an apartment and sold our home of 50-plus years. 

We both have a more than adequate superannuation income (she takes only half of the original amount) leaving us with a surplus each month.

ask paul clitheroe i only have five years left to live

Assets include a share portfolio of $600,000 (mainly banks) and income greater than $23,000pa. We have had our shares for 40-plus years and seen a few ups and downs. 

The problem is what to do with $460,000 now in a bank. The possibilities are to invest in: 
• Exchange traded funds (ETFs), such as Vanguard (VAS) or Betashares A200 (directly). 
• Argo or AFIC. 
• Invest through a vehicle such as Stockspot or InvestSMART. 

Of course, the ASX might suffer a major downturn during the next four to five years. However, our children (and my wife) do not have to sell at a loss. They could wait for the market to rebound.

I am assuming that they have the wit to hold these assets as sources of income (I hope I am right in assuming that shares, etc, are not subject to the capital gains tax until sold).

What are your thoughts? - Geoff

Firstly, Geoff, I am really sorry to hear about your medical advice. Hopefully medical advances will see your time extended.

As a long-term investor, you've seen it all. You know as well as I do that good returns come from sensible assets held over the long term.

I burst out laughing at your comment that you expect your family to have the wits to hold these assets in market downturns and enjoy the income over time. My suspicion is they have learnt from you and I am sure they will do this!

Frankly, you have provided a list of really sensible ideas and one I cannot add much value to.

Sure, we could have a fun debate about some private equity or a focus on particular investment themes, but investing via low-cost ETFs or a listed investment company like Argo or AFIC makes complete sense to me.

I am chair of InvestSMART, so I'll leave that alone, but I can say that whether it's InvestSMART or a similar company, holding a mix of ETFs in a single portfolio is a sound concept.

I do like the idea of you diversifying from a mainly bank portfolio - any of your suggestions will do this.

Thanks for getting in touch. I really enjoying hearing from people who have done well with long-term investments. Best wishes to you and your family.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.