Ask Paul: I'm on a disability pension, what's a safe investment for me?

Q. I have $30,000 I could invest and have no idea where or what would be a good option.

I am currently on an invalid pension, which provides my weekly needs, and I have a few thousand extra set aside for emergencies.

Any help in pointing me in the right direction would be much appreciated. - Julia

A. Julia, the key issue for you is the security of that $30,000. The safe and simple option, which you are probably already doing, is a term deposit.

The problem, of course, is that it will only pay you around 2.5%pa in interest.

I feel a bit uncomfortable about this but providing you have ample emergency money and your health is stable, you could consider an income-type fund.

These invest in a mix of property, shares and fixed interest. A return of closer to 5% is a reasonable expectation. My concern is that if markets fall, your money would fall in value as well.

If you were to do this, I would not use more than $20,000, and you would need to have a long-term view, say over five years. Once again it is the risk-and-return game.

It is a bit more risk but with a better return.

Most managers such as MLC, AMP, BT and so on offer income funds but it really would need to pass your sleep-at-night test. If you are in any doubt, be safe and keep it in a term deposit.

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