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