Home' API Magazine : July 2014 Contents GEMMACARR
API JULY 2014
JULY 2014 API
API JULY 2014
JULY 2014 API
Better late than never
Like many baby boomers, Loretta Mylius
spent most of her working life putting her
two children first and never really worrying
about her own future.
When the 56-year-old started her career,
there wasn’t compulsory superannuation
and investing was out of the question –
Loretta only lived week to week, providing
as much as she could for her daughters.
But years of putting others first had big consequences. The single
mother admits she now has next to nothing in super and, until
recently, was facing a tough retirement.
“I didn’t start getting super until much, much later,” Loretta admits.
“There’s no way I could save for another 10 years and then retire on it.”
Fortunately, Loretta had a lot of equity behind her, thanks to
paying down most of her mortgage on a property in Chelsea Heights,
Melbourne, which is worth about $470,000.
After turning 55, alarm bells started ringing when Loretta realised
she only had 10 years until retirement.
She certainly isn’t alone – it’s a deadline that makes many baby
boomers panic after years of slogging it out. While everyone dreams
of playing golf or travelling the world after life in the workforce, the
reality can be very different if there are no plans put in place.
Having never invested before, Loretta sought advice from a
financial planner and buyers’ agent, choosing a more cautious
approach to purchase her first investment property.
Baby boomers can’t afford to get it wrong because they just don’t
have the time to make up for mistakes if the property doesn’t perform.
Loretta isn’t prepared to take big risks, and that’s why she decided
to purchase a property in the safe but stable and promising area
of Ballarat in Victoria. She has taken on many of the tips for baby
boomers, including being realistic, not borrowing too much and
considering the rental yield of the property.
Ballarat ticked all the boxes and after finding a four-bedroom brick
house, Loretta has just settled on her first investment property.
She paid a very affordable $265,000 for the investment and is
giving the property a mini renovation, replacing the carpet, painting
over the purple and pink walls and also installing central heating. She
hopes to rent it out for about $310 per week in a few weeks, which
means the property should be more or less neutrally geared.
Another big tip for baby boomers is structuring the loan correctly.
For the first time in her life, Loretta has just set up an offset account.
“A lot of young people do it these days but I never did, being a single
mum and all,” Loretta says.
“The pay goes into that offset account now, the bills are directly
debited through a credit card and I don’t use the credit card for
anything but the bills. That’s then paid off every month out of the
offset account. I also get weekly money to spend on food, etc.”
Loretta’s only regret is the fact she didn’t start investing much
earlier in life. She advises baby boomers thinking about investing
that it’s never too late to start and planning for your future today
and making small sacrifices is much better than having no financial
nest egg for life after the workforce. Her plan is to purchase another
property before retirement, using the equity she already has, and aim
for something with a high yield in another regional area.
“There are a lot of things I wish I could have done 20 years ago,”
Loretta says. “If I didn’t do this, I would still be living week to week on
a wage and not doing anything about the future.
“Hopefully when I retire I can still have some weekly income from
the investment properties. It’s all still very new to me but it’s working
out so far. I’m very glad I have done this, I think it’s just meant to be.”
> Stop procrastinating –
better late than never.
> Establish an offset
> Use the help of
> Don’t take big risks.
> Consider rental yield.
Loretta’s top tips
Strategy: Buy and
COVER STORY // GENERATION WEALTH
Links Archive June 2014 August 2014 Navigation Previous Page Next Page