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

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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.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
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