Ask Paul: I earn $180k - how else can I build wealth?


Ask Paul Clitheroe

Reader: I am 54 and earn $180,000pa. My wife, 47, is a homemaker. We have $100,000 in a term deposit earning 2.9%. My super stands at $100,000 and I have a home worth $420,000 (mortgage $290,000). I also have an investment property valued at $520,000, with the rent covering the interest repayments. I am considering the following strategy in the next two years: contribute a one-off payment (non-concessionary) to boost my super balance; use the equity in my home to finance a deposit for another investment property. Given low interest rates, I would not be in such a hurry to pay off my home or salary sacrifice more to super. Are there any other strategies that will enable us to build wealth?

Paul: You have done a good analysis and most of the work for me, which is terrific. The better you understand your options the better the decision you will make.


I agree you need not worry about your mortgage debt at this stage.

I do think building super is your best option at 54 and as a high-income earner.

I'd be maximising deductible contributions and I agree about the non-concessional contribution; that is, using after-tax funds such as the term deposit.

With two properties already, I prefer the option to build super, with a particular focus on offshore shares.

Here you can simply use your fund's international option.

With your high income I suspect you could add to super and buy another investment property by increasing debt.

This, of course, is higher risk - debt is great when times are good, terrible when they are bad.

Only you can make the call about risk.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
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