Buying an investment property in a boom can be risky

I am a 45-12 months-aged nurse earning about $120,000 a 12 months, with dwelling costs of $27,000 and superannuation of about $213,000. I utilized to salary sacrifice to the maximum but stopped in the past 3 years, considering the fact that I submitted for individual bankruptcy in February 2019, owing to a disastrous home investment in the mining city of Newman, Western Australia. I will be discharged from personal bankruptcy in February 2022. Following discharge at age 46, I prepare to get a house for about $650,000 with a $140,000 dollars deposit. I speculate if I must continue on to income sacrifice to the highest of $27,500 a calendar year, or should really I emphasis on entirely paying out off my home loan? I approach to pay back it off in 6.5 decades, earning about $150,000 from July 2022 onwards. I am single and have no little ones. Just after I pay out off my home loan at age 53, I can last but not least quit functioning evening shifts and my money will come down to $95,000 a yr. I prepare to retire at age 60 – when I’m nonetheless healthful. L.L.

I normally set two key targets for retirement: to end doing work with a fully paid-off household and more than enough funds in tremendous to make the tax-absolutely free money you need to have for dwelling expenses. It is difficult when starting up from scratch – and not normally attainable.

Property prices in Newman boomed before losing up to 80 per cent of their value.

Property costs in Newman boomed just before shedding up to 80 for each cent of their benefit.Credit score:Krystle Wright

At the finish of the working day, if both of those plans cannot be realized, there is normally the protection web of the age pension. So, that is why I propose supplying priority to having to pay off your home loan in advance of salary sacrificing to leading up your employer’s 10 for every cent tremendous contributions.

That’s unfortunate news about your individual bankruptcy.

I am mindful that residence prices in mining cities peaked in 2011-12 throughout the mining increase. An ABC news report signifies Pilbara median property selling prices afterwards fell a lot more than 80 for every cent when the growth soured.

It is a superior lesson that purchasing an investment property in a boom can be dangerous, even though price ranges in Newman have since turned up.

I am aged 46, earning $190,000 a year and my wife, 47, is doing the job 4 times a week and earning $120,000. We are each fairly healthy and have two kids aged 11 and 9, due to go to private substantial educational facilities at a cost of $40,000 a calendar year each in 2023 and 2025, respectively. We very own our dwelling valued at $2.4 million and have $955,000 in joint investments, as well as $556,000 in my tremendous and $358,000 in my wife’s super. We also have an investment unit valued at $450,000 with a mortgage of $400,000. Our combined monthly income is $17,000. Our monthly expenses are $10,000 (excluding personal faculty charges). We would like to maintain this way of living, or close to it, for the relaxation of our life, altered for long term inflation. We have equally acquired rather significant incomes for most of our performing lives and have a reasonably modest but comfy way of living, prioritising the requirements of our young children. We each would like to retire at age 50. Are we on keep track of? P. L.

If you retire at 50, your spouse would have a statistical lifestyle expectancy of some 37 a long time and, as generally, I insert five years to that, assuming she is healthful and will dwell for a longer time than the common.

If you then approach to commit $120,000 a calendar year, indexed to 3 for every cent for inflation, you could anticipate to go via financial savings of about $2.7 million. On prime of that, you would shell out about $500,000 on university expenses, additionally considerably a lot more on athletics as well as any non-public tuition and then tertiary instruction.