Just starting your career? Inherited $300K? Interested in ethical investment? Well you're not alone. Read on to find out how to max your cash

Money man Noel Whittaker is the author of the best-selling 'Making Money Made Simple' (Simon & Schuster, $19.95). Got a finicky financial question? Send 'em through here. If anyone's got a solution, it's Noel.






Q: Having just started my career at 24, I'm looking to head overseas in two years and want to know how best to invest $25,000 in the meantime?

- GF


A: For a term as short as two years, I prefer the online interest-bearing savings accounts offered by the major banks. Your money is secure, there are no entry or exit fees and there is no possibility of a loss of capital if the market falls. All the accounts are compared at ratecity.com.au.

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Q: At 50, I recently inherited $300,000 and am now salary sacrificing 80 per cent of my wage and living off the inheritance and my wife's salary. Do you think this is a good plan?

- AS


A: There is no benefit in salary sacrificing to a point where the reduced salary is less than $30,000 a year, as this is the level where the 15 per cent marginal tax rate changes to 30 per cent. Remember, salary-sacrificed contributions lose 15 per cent entry tax.

Having said that, salary sacrifice is a superb strategy for a person of your age because you can access your super after the age of 55 if you wish. This can be done by retiring and taking a lump sum or by starting a transition to retirement pension if you are still working.

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Q: What's your view of ethical funds?

- CP

A: Most ethical funds have a history of producing returns that are comparable with other managed funds, so I see no major disadvantages in choosing them, as long as you discuss the assets they hold with your adviser, to ensure that they fit in with your risk profile. A major decision should be whether you hold them in your name or through your superannuation fund.

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