Ask Paul: I'm 75 and my term deposits are going backwards

Dear Paul,

I have kept an eye on you for years, Paul.

I am 75 years young, married, with no dependants, and we own our own house. I'm very disappointed with the returns on my term deposit. 

I feel I should take the plunge into the stockmarket but I have no experience and need some Dutch courage.

I am a disaster with tech stuff (I don't even have a computer), but I have more than $750,000 to play with. 

Over to you, Paul ... stay safe. - Raymond

I hope, Raymond, that I have stood up to your "close eye" over the years. I guess I must have done as you are kind enough to ask me for my opinion, something I do value and appreciate.

The returns on term deposits really are tragic. We all understand why: money is cheap right now.

You have had years of experience following markets, nearly a decade more than I have.

So, like me, you will remember back to the early 1990s when a term deposit was paying 16%. The bad news for those, like me, with a mortgage back then was than mortgage interest rates were over 18%!

As a debt-free homeowner, with surplus investable cash of over $750,000, you certainly should consider taking on more risk for better returns. Here we could have a long discussion about risk. For me to give you more than information and an opinion, I'd need to know a lot more about your total assets, income needs, age pension (if any) and a host of other details. This is a large amount and I would strongly suggest you talk to a fee-charging, professional adviser.

But what I can say is that at 66 and debt free, my wife and I hold our investable assets in a broadly balanced portfolio of shares, infrastructure, fixed interest and, yes, we do hold some "rainy day" money in term deposits.

What I would like you to discuss with an adviser is something similar. If you are keen to "DIY", a way to get broad market exposure at very low cost is to chat to a couple of large, reputable and low-cost managers such as BlackRock or Vanguard.

Like most professional managers, they have broadly diversified funds. Another way to get broad sharemarket exposure at a low cost is through one of the large listed funds such as Argo or AFI.

I'd certainly prefer to see you with a great manager offering diversification to better protect your money.

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