Ask Paul: I followed your advice in 1997 and look where it got me


Gerard: Dear Paul, I followed your advice in 1997 on a Money TV show that year.

It was to invest $2000 in four shares: CSR, NMW and Lendlease, and I don't remember the last one.

I still own Lendlease but out of these four shares only one went up and up and up. I started with the $2000 and you can add two zeros these days, thanks to you.

Now my question is: I'm 66 years old, retiring next month with $200,000 in super and $200,000 in shares, mainly small caps, which don't give many dividends.

paul clitheroe money magazine savings owe financial independence

What should I do?

Paul: An excellent example of why I have always encouraged diversification, Gerard.

Despite my best efforts and a strong team of analysts who help me, the simple truth is the future is uncertain.

My portfolio is the same. A few shares, sadly, do poorly, most do pretty well and a few are superstars.

Anyway, I am delighted to hear that you can add two zeros to the money you put into shares.

We are similar ages - I am 62 this year - so we are in the same boat. My thoughts would be to better diversify as you get older, as I have done.

The risk of major losses is not a good idea as we hit retirement. You hold mainly small-cap shares in super and your portfolio.

As your super becomes tax free when you retire and convert to a pension, I'd suggest spreading your risk and adding some of our major companies that pay nice dividends.

I do love getting franked dividends into my super fund as, like you, I get the franking credits back in cash to my fund.

So an investment in many well-known companies is returning me income of around 7%, including the franking credits.


Paul Clitheroe AM is a respected financial adviser and Money's chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Got a money question? Ask Paul.
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