Hi Vanessa,
I grew up poor and as a result, have a very risk-averse relationship with money.
I am 53 and through sheer hard work have achieved my long-term goal of being mortgage free.
This means I now have a lot more disposable income – about $4,000 a month – to either save or spend.
My friends are telling me to buy an investment property, but the idea of going into debt again – even if it is ‘good debt’ scares me.
Should I just put $2,000 of my monthly disposable income into superannuation, and the other $2,000 into a savings account that I can access whenever I want?
I don’t want to buy shares, I prefer the security of a savings account even if the return is less.
Thank you,
Kate.
Send your questions to Vanessa at flourishingafter50@dailymail.com.au.
If you’d like to learn more about identifying your life goals and how to spend your money to achieve them, check out my mini-course Designing Your Dream Life here.
Leading money educator Vanessa Stoykov answers readers’ questions about how to best prepare for a fun-filled retirement in her weekly column Flourishing After 50
Hi Kate,
First off, congratulations on achieving your goal of becoming mortgage free – that’s an incredible accomplishment! Many people in their 50s are still struggling with debt, and the fact that you’ve worked so hard to get here is a testament to your determination. You should be very proud of what you’ve achieved.
Your question is a great one, and I want to share a story about someone I know who was in a similar situation, which might help you as you navigate the next stage of financial decision making.
Let me tell you about my friend Sarah. Sarah grew up in a family where money was always tight. Like you, she worked her way up and made it her mission to pay off her mortgage. She was determined never to feel the insecurity of debt again. By the time she was in her early 50s, she found herself mortgage free and, for the first time, with extra disposable income.
Now, much like you, Sarah’s friends were all about the idea of investing in property or shares, but she couldn’t stomach the idea of taking on debt again – even if everyone was telling her it was ‘good debt’. After so many years of playing it safe, Sarah was risk-averse and didn’t want to lose the sense of security she had worked so hard to build.
Here’s what Sarah did. She didn’t ignore the advice of her friends, but she also didn’t rush into something she wasn’t comfortable with. She split her extra income just like you’re thinking of doing – half into her superannuation and half into an accessible high-interest savings account. This gave her the best of both worlds: growing her wealth for the long-term through super, while having peace of mind knowing she had cash on hand if she ever needed it.
But before you make any decisions, let me share what my friend Natallia Smith, an independent financial planner, who specialises in helping women at Truwealth Advice had to say about your question:
‘Before you make any decisions, it’s important to pause and reflect on your financial goals – both short and long term. What do you envision for yourself? Perhaps it’s that well-deserved holiday, or maybe early retirement? Your money is simply a tool to help you achieve those dreams, so keeping them top of mind is essential.
‘Setting aside $2,000 per month in a savings account gives you a reliable safety net for emergencies or unexpected expenses, which can offer a real sense of security. It’s also a great way to save for any short-term goals you may have. Given your background, it’s completely understandable that you may feel cautious about riskier investments, like property or shares, which can feel overwhelming.
‘While growth assets, such as property or shares, can potentially offer higher returns in the long run, they do come with increased risk. They’re often better suited for those who are more comfortable with uncertainty and have a longer time horizon.’
Financial planner Natallia Smith, from Truwealth Advice, specialises in helping women achieve their financial goals
‘However, your consideration of contributing to superannuation is an excellent idea. It’s a powerful way to build your retirement savings, offering both tax advantages and the opportunity for long-term growth. Superannuation typically involves growth assets, but you can choose an investment option that aligns with your risk tolerance. It’s always a good idea to review your super fund’s investment option to ensure it matches your retirement goals.
‘If you’re feeling uncertain or uneasy about these decisions, you’re not alone. It’s completely normal to have reservations, especially when it comes to your financial future. This is where seeking tailored professional financial advice can provide clarity and peace of mind.’
Do What Feels Right
At the end of the day, the best financial decisions are the ones that let you sleep at night. Sarah ended up thriving by sticking to what felt right for her while taking small steps to grow her wealth. She never regretted her choice because it suited her comfort zone, and she still has financial freedom today.
We’ll send you a copy of my book The Breakfast Club for 40-Somethings for asking such a thoughtful question, and I hope it provides you with even more inspiration on your journey.
And to anyone else with a question about money or life after 50, feel free to write in – there’s no one-size-fits-all when it comes to finances, and I’d love to help you find the path that works for you.
Vanessa.
