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Married with a baby, where should I invest my money?

Doug: I am 28 and earn $150,000pa plus super; my wife is also 28 and is a stay-at-home mum with our 16-month-old son.

We live in company housing and pay only $100 a fortnight with utilities bills covered.

We have two investment properties in Perth: a house valued at $500,000 (mortgage $455,000) and an apartment valued at $430,000 (mortgage $413,000).

We have $80,000 in super combined and I’m adding an extra 2.5% pre-tax and work is matching it dollar for dollar.

We have $17,000 in savings that is offsetting the home loans and have no other debts. We are thinking of possible investments but are not sure what to do – shares, property or adding more to super?

What would you suggest is our best move?

Paul: Doug, on your salary maxing out your super makes a heap of sense. And as you pay a fair bit of tax, so I would suggest adding more than the 2.5% extra.

But the problem is that at just 28 you have more than 30 years to retirement and, as we are living longer, I suspect that the time period before super access will move out. The next bit depends on your career.

You mention company housing but I don’t know how long it will last, nor if you will have more kids, whether your wife will go back to work and so on.

As you have two properties in Perth already and your super – which should be mainly invested in shares – my inclination would be to maintain flexibility by saving as much as you can into your offset account.

Building these savings will give you much better control over your future options.

Written by Paul Clitheroe

Paul Clitheroe

Paul Clitheroe AM is a respected financial adviser and Money’s chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books which have sold more than 600,000 copies. Email Paul your question (must be 150 words or less).

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