Ask Paul: Should I take money out of our offset account to buy gold?
I'm wondering where to move some of our cash, which is in our offset account, along with our monthly savings. While I appreciate the safety and guaranteed rate of return, it doesn't seem to be the best way to grow this money into something more meaningful.
I'm 41 and my wife is 35; we have two young children and are planning a third. I work full time, earning $155,000pa plus a bonus structure, and my wife works part time, earning $30,000pa.
We owe $351,000 on our mortgage with $60,000 in our offset account (we purchased a car a year ago and dented these savings) and a property value of $750,000.
We also have some gold and silver bullion with a value of $19,000 at current prices. This has grown considerably in value since we began buying three years ago.
We're able to save around $2500 a month, so should we continue to just save and buy more gold and silver or look to other assets such as exchange traded funds (ETFs), individual stocks or a managed fund?
Everything seems terribly overvalued and no investment seems to make sense to me at the moment.
In this very strange COVID-19 world, Luke, not a lot makes sense to me!
However, I get your point about saving via an offset account. I imagine this is effectively earning you around 2.5%, which is a good, safe return and not to be sneezed at. But history says you should be able to earn better returns than that, though with more risk.
I am relaxed about your buying gold and silver bullion, though my own preference is to look at shares in gold-producing companies or a gold-focused ETF.
One thing we can do about uncertainty is to diversify our investments, so I do like the idea of you adding this to your portfolio via low-cost
ETFs or a managed fund.
Buying individual shares is also fine, providing you have the interest and the time to do so.
First up, though, in your shoes I'd be maxing out salary sacrifice into super.
You are a high taxpayer and the 15% tax rate on super contributions from your salary is a huge saving on the amount of tax you pay on money you take home. A good super fund will also give you low-cost access to Australian and international assets.
Despite the global volatility, my view is to keep investing in a sensible, diversified fashion.