Women In The Black

Hello Anne, I have been heartened to find the Women In The Black website today. It has taken me until my forties to begin taking control of my money. I am on the financial back foot. However, I am in the position of having an excellent credit rating, no debts and I am saving over 40% of my wage. By this time next year I plan to have saved $30,000. This may not sound like much, but to me it is a small fortune and represents much hard work. At this stage I am thinking of purchasing an investment property and perhaps investing a portion in stocks. My question is, how should I use this money to have it yield more? Thank you for your time, Prue

October 22, 2013   Asked by Anonymous, Teacher (Primary), Sydney

Hi Prue – thank you for your question. You’re doing so well with your finances, so give yourself a big pat on the back. I see so many people (male and female) who are not in great financial shape but find it almost impossible to change habits and turn themselves around. It takes focus and commitment which you obviously have. The next step for you is to think about what you really want (income, security, capital growth, etc) and that will help focus your energy in the right direction.

When you’ve decided what your goals are, together with a timeframe it makes it much easier to determine the right course of action. You also need to consider your tolerance for losing capital, the need for wealth creation and the level of debt you’re comfortable with. Your answers to these questions will make the choices available much clearer.

When investing in a share portfolio the income generated (dividends) is taxable although many Australian shares have franking credits which helps reduce tax. A share portfolio is generally recommended for investors with a long timeframe of say 5 years or more due to the volatility of the share market and the risk of a loss over the short term. Diversification is important meaning a portfolio should hold a range of stocks across different companies and sectors. The cost of investing is limited to brokerage which is either a flat fee or a percentage of the portfolio balance.

An alternative to investing in direct shares is using managed funds. These are suitable for people requiring a diversified portfolio which would include Australian shares, together with International shares, property, fixed income and other investments. An initial investment as little as $1,000 can be made and regular amounts can be invested say monthly.

Investment in property involves larger sums of money due to the cost of property and therefore you would need to borrow funds. The first thing to do is research the loans available and how much a lender will allow you to borrow. It’s always good to do your own sums to see if you are actually comfortable with that level of debt and can meet the loan repayments. When doing your sums, allow a buffer to cater for interest rate increases and unexpected expenses. Costs of investing in property include stamp duty, legal/conveyancing fees, bank/loan fees and other various expenses. A deposit of 20 per cent is usually recommended so property investment might not be viable for you at this time.

When considering investment options, don’t forget to leave yourself a cash reserve for emergencies.

I hope this helps and please note that the information is general in nature and may change depending on your particular circumstances. Good luck and keep up the good work.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Expert Profile

Anne Graham
Anne Graham   Personal Finance Expert

Anne is the Partner and Managing Director at McPhail HLG Financial Planning. Anne is an authorised representative of Securitor Financial Group an Australian Financial Services Licensee, License No. 240687; ASIC Authorisation Representative Number 245962.


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