How safe is our fixed term deposit with Suncorp?

Q.  How safe is our fixed term deposit of $260,000 with Suncorp that we have deposited for 3 years? I have heard a few rumours that Suncorp could be sold and wonder how safe are our funds a) if suncorp is not sold and b) if suncorp is sold. My husband and I are both now retired and wanted to be sure of our investment.

Josie’s answer:   Lots of rumours flying around at the moment that Suncorp will be gobbled up by the Commonwealth Bank or ANZ.  CBA have already pounced on Bank West.

Oh the poor banks they really seem to be really suffering at the moment (with my tongue firmly in my cheek!).   Suncorp are a second tier bank, which means they don’t have the same rating as the big four i.e. Commonwealth, ANZ, NAB and Westpac. Read more

Investment paying 12%pa - is it too good to be true?

Q.  I recently saw an investment for a sporting club raising funds that advertised 12% per annum compounded, calculated annually (over 5 years in unsecured notes.)  I have no intention of investing, but the return is interesting and seems too good to be true. Have I misunderstood the 12% pa compounding annually.

Josie’s answer:  Compounding annually means that they credit interest 12% interest on 30 June and the following year, they will pay 12% on the original investment, plus the 12% paid the previous year … and so on it goes until the end of year 5. Read more

Where should I invest $10,000?

Q. I was wondering if you could provide me with some advice on the best options for investing my savings. I’m in my early 20’s with almost $10,000 dollars saved.

At the moment its just sitting in my internet banking account, providing me with little interest. I want to invest it in a long term method and was thinking shares, but I’m not sure how to go about it.

I would love your opinion on how I should go about investing my savings or any other information you could provide me. Read more

My son is on a Disability Pension and I want to invest money for him.

Q. I have a son aged 18 who has a disability and have just been arranging to set up a Special Disability trust via my will. I believe that Income resulting from this will not affect his disability pension.

If I were to invest some money for him now, I am wondering if there is an option that would have less impact on his disability pension now. Is it best to have an investment in my name rather than his so that when I die that money goes into his trust fund.

Josie’s answer: As you are probably aware, the intention of a special disability trusts is encourage families to make their own arrangements for family members with a severe disability.

It is great to see the Government acknowledging the contribution carers of disabled people are making to our community.

A big advantage of establishing one is that the ordinary Centrelink means test rules do not apply.

Most importantly, the trust must be established for the sole purpose of providing care and accommodation for a person with a severe disability. Read more

Term deposit or super - Which one is best for me?

Q. I have $17,100 in first state super I’m retired on a carers pension and am 54yrs old, I wish to invest $20,000 I don’t know if I should go with our bank in a term deposit at 8.1% or put it into my super?

Josie’s answer: Assuming you are not working and your sole income is the carer’s pension, then there is no significant advantage to contributing to super as the earnings within super are taxed at a maximum of 15%.

A possible advantage of contributing the funds to superannuation would be to maximise the pension should your investments exceed the income and assets test.

The reason for this is that you are under age pension age and funds held in superannuation funds are not counted.

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What is the Secret to successful investing?

Q. What is the secret to successful investing in the share market?

Josie’s Answer - Good question. Investing in quality assets is imperative, but there is an old saying that TIME, NOT TIMING the market is the key and I tend to agree with this.

Determining the right time to buy and sell shares* requires as much good luck as good judgment. More often than not ‘market timers’ sell when the market is low and are out of the market when the market rallies.

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My Financial Planner wants me to take out a margin loan?

Q. My financial planner has suggested I take out a margin loan to buy into Australian shares via a managed fund. Is this is a good idea?

Josie’s answer: Margin lending is not for everyone, you need to be a savvy investor and happy to take risks.

Before committing yourself to a margin loan, make sure you have extra income to cover the interest payments, even if the interest rate suddenly goes up or your investment makes a loss.

Most importantly, you must be committed to investing for the long term and emotionally be able to cope with making a loss.
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Is Topping up margin loans risky?

Q. I’ve heard of people who have a margin loan being asked to top up their geared investment at a moments notice. Sounds risky?

Josie’s answer: If your investment loses money, not only is the loss magnified as well, but you still have to pay back the loan. With a margin loan, your lender will ask you to repay part of your loan or top up your account with some other security, such as other shares you may have. If you can’t do this, you might be forced to sell part of your investment.

It is all to do with the debt to equity ratio. If you keep this at a reasonable level, around 50% equity/50% debt, normally things are OK, but there are never any guarantees.

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