How can we invest for our grandkids when markets are so volatile?

Currently, I have investment bonds for my grandchildren invested in a high-growth option, given the money will sit in their for a long time. With the arrival of a new child, and perceived increased uncertainty in the market, is this still the way forward? Should I now be taking a more conservative approach?

In a word, no. There is always market noise, and if we look for it, a reason to convince ourselves to sit on the side lines. Markets today are no more uncertain than they were last year, or 10 years ago. They will rise around 4 out of 5 years. Negative years will happen, and are part of investing.

The higher returns you receive from stock market investments is the compensation you get for tolerating occasional negative returns. This investment for your new grandchild will likely run 20 years plus.

Over that time span the positive years will significantly outweigh the negative. Your current strategy is a good one, stick to it.

My wife and I are in our 70s and have a self-managed super fund in pension mode. We find the fees are becoming prohibitive. We would like to sell our portfolio and join an industry fund. Would you have any advice on how to transition over, as we are not confident in selling our fund?

You are on the right track with regards the process. First, you would each open accounts with your super fund of choice. Next you would liquidate the assets in the SMSF. If it is a share portfolio you could have your cash in three days.

Property assets will take longer, and if you have term deposits, you may need to wait for them to mature. Where you want to get to, is having your total SMSF balance held in cash.

You would then work in concert with your fund’s accountant to get the monies rolled over from the SMSF to your new accounts via the SuperStream system. It is crucial to get this step right. Do not try and DIY this element.

It needs to be a rollover rather than a withdrawal. Done incorrectly you could have contribution cap and potentially transfer balance cap problems. Typically, you’d leave a few thousand dollars behind in the SMSF to cover wind-up costs.

With regard to having the confidence to pull the trigger on this, perhaps you could lean on the fund’s accountant, or the financial planner who assists you with the SMSF.

My mother, aged 90, is of sound mind and lives independently on her own and in her own home. She receives a defined benefit pension of $55,000 pa. She needs another $25,000 pa to cover all her living expenses. She recently sold an investment property and netted $1.4 million which is currently invested in term deposits. She is interested in very low-risk investments with a minimum of administration. Are there alternate investment options or structures that would reduce tax liabilities relative to term deposits?

Thanks for your question. From what you describe the term deposits seem like a pretty good fit here. Her tax liability would be negligible.