If I did this, I would have about $230,000 to invest. What do you think I should invest this money in?
A: You seem to be someone who's not afraid to take a risk or two. And you've set yourself up well to cope with that.
Property, global shares and, in particular, gold mining are investments that can grow fast but can also fall in value.
But because you're diversified over all three, you've considerably reduced the risk that your total portfolio will fall in value.
What's more, you've got more than one property, lots of shares within the mutual funds (which are a type of share fund) and, apparently, investments in more than one gold mine.
You may have rather more property than I would recommend - unless you also have a great deal of money in the other investments. But, over all, your spread is good.
And, by being willing to take some risks, you are probably better off than more conservative investors.
With retirement approaching, though, you're wise to review your situation.
It's best to have the money you plan to spend in the next five to 10 years in less volatile investments. That way, when you want the money you won't be hit by selling in a down market.
You might also reduce the riskiness of your longer-term money. So getting out of the gold is a good idea, and not just because you have done well in it.
I wouldn't sell all the gold investments at once, though. You might regret it, if they keep rising in value. Perhaps phase your sales over a year or so.
What should you do with the $230,000? I'm assuming you have a mortgage-free home. If not, I would pay off your mortgage first. That gives you a good, secure base in retirement.
It might also be wise to pay off any mortgages on your rental properties.
You can, of course, deduct rental mortgage interest from your taxes. But still, getting rid of those loans can be a good move.
Let's say you're paying 8 per cent on a rental property mortgage. Even after taking the tax deduction into account, paying off the mortgage is the same as earning 8 per cent, before tax, on another investment. Not to be sneezed at.
And mortgage-free or low-mortgage property investments are much less risky than highly mortgaged ones.
That taken care of, I would talk to a sharebroker about buying corporate bonds and other fixed interest investments.
They will pay you more interest than term deposits. And as long as you stick with high-quality instruments, they should be safe.
Your aim should be to line up enough income from your rental properties (after expenses) and bonds for, say, the first five years of your retirement.
What about the sick-looking global share mutual funds? Nobody knows, of course, but I would be really surprised if their value doesn't rise in the next three years.
Otherwise, we will have been through an extraordinarily long downturn.
In any case, it doesn't sound as if you will need to sell that investment on retirement day. I would regard that chunk of your portfolio as funding for later in your retirement, and plan not to sell for perhaps 10 years or more. That should get you back into positive return territory.
I was recently looking at average annual returns on world shares, as measured by the MSCI index, over many 10-year periods. The first 10 years ended in January 1980, the next in February 1980, and so on each month through to December 2002. That's 276 numbers.
In none of those 10 years was the average annual return negative, or anywhere near it. The worst average was almost 5 per cent a year; the best was more than 28 per cent.
And three-quarters of the time the average was more than 10 per cent.
On the other hand, when I looked at monthly figures, they were negative 38 per cent of the time. Clearly, global shares are for the long haul.
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