Ask Paul: What's next - property, shares, super or mortgage?

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Q. We are parents of two young children (aged two and five). We are 37 and 41 and owe $110,000 on our Sydney home, which is worth about $950,000.

My husband earns about $2000 a week. I will return to part-time work at the beginning of 2019, earning about $400 a week.

Besides super (combined total $350,000) we have no other investments.

ask paul investment property super shares mortgage

We want to prepare for the future (looking after our two daughters and our retirement).

Considering our age, income and family status, should we look at an investment property, shares, or super, or focus on paying off our mortgage? - Tanya

A. You are in a terrific situation for people of your youthful age. You may laugh at this but at 63 you sound really young to me!

Normally I am super keen on people getting rid of their mortgage, and in your case that remains the safest thing to do. But you are down to the last $110,000 of debt and you have a stack of equity in your home.

Your husband is a high-income earner and you are going back to work. So in your case I am pretty relaxed about you paying off the mortgage over time and building wealth outside your home.

First, I would think your husband should be maxing out his concessionary super contributions to the full $25,000pa allowed. Then with a weak property market in many parts of Australia, and one that in my opinion will get worse, it is a good time to take a leisurely look at investment options.

I am equally happy for you to build a share portfolio. Decent shares and well-located property both tend to do well over time, so it is a bit of a personal choice.

My preference is for us all to own both but you are doing this now with your existing property and a very healthy super balance.

If you do go the investment property route, please do your own research and don't overgear. You are in a great position; it would be silly to blow that by taking too much risk.

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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. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.