Income: $100,000 plus superannuation.
Assets: Home valued at $400,000; a $70,000 share in another house. Super, Van, $140,000; Celina, $10,000 (Van contributes $3000 a year to Celina's super); Shares value d at $20,000 in Van's name.
Savings: $50,000 in a cash management account.
Weekly expenses: Food and entertainment, $300 to $400; other household expenses, $200.
Debts: Credit cards, $1000.
Goals: To maintain our present lifestyle in retirement.
* Not their real names.

Van and Celina want to know how they can sustain their present lifestyle in retirement. Van wants to invest in commercial property and to minimise his income tax bill.

Van also wants to contribute more to his wife's super fund.

"Is it true," he asks "that from July 1, 2003, I will be able to sacrifice my gross salary to my wife's fund? If that is the case, I plan to put at least $30,000 into her super per year."

Van also wants to set up accounts for his children "to provide for their future".

"I want to have regular income stream when we retire," Van says. "We need a net income of $800 per week for both of us."

The couple say they enjoy a comfortable lifestyle at the moment and would like to sustain that when Van stops work in five to seven years' time.

"Our family hobbies are going out for dinner (and) travelling overseas," Van says. "My wife loves shopping and I do bit of gardening. The kids love computers and surfing the Net."

Van saw a financial adviser three years ago but hasn't seen him since.

Christine Davie, certified financial planner with Donohue Financial Planning and a member of the Financial Planning Association, replies:

Van and Celina, you are in a terrific position but you need to be disciplined to take advantage of all the opportunities available to you. You will need to do three things - stick to a broad budget, allow for various investment programs and invest appropriately for your time horizon.

There are a number of different strategies you could adopt.

Super is the first option. Super is one of the most taxeffective investments because the tax on contributions is only 15 per cent. The main disadvantage is that you cannot touch it until after you have retired and turned 55. If you would like to retire in five to seven years, you will need an alternative income.

You are taking advantage of the tax concessions available to you by salary sacrificing $26,000 a year into Van's super and making a spouse contribution of $3000, which attracts an 18 per cent rebate.

The Federal Government says it intends to allow employees to make salary sacrificed super contributions on behalf of their spouse from July 1. The rules about the maximum amount you can salary sacrifice will still be in place, so the amount of super that Van can contribute to Celina's account will be limited. The legislation has not yet been passed.

Another investment option is to invest in a balanced portfolio of managed funds including Australian and international shares, as well as listed property trusts. This will satisfy your desire to invest in commercial property. I suggest you steer clear of directly investing in commercial property, unless you have particular expertise in selecting and managing such a property, as the time demands and the risks involved are too high.

Another option is borrowing to invest in a portfolio of managed funds. If your portfolio is negatively geared it will provide some tax relief. You may also receive imputation credits and depreciation allowances from the funds that you invest in.

A warning about investing for your children. Because they are both under 18, any nonearned income, such as income from investments, attracts a tax rate of 66 per cent. It would be better to invest in Celina's name and transfer the funds to your children when they are buying their first home or need to pay for tertiary education.

If you invest your cash and establish a geared portfolio, in 10 years' time your net asset position and your income stream will increase substantially.

You should consider getting professional advice from a wellqualified financial planner about how to structure your investment portfolio and about borrowing to invest. If you do not feel confident that your financial planner wants to have regular contact, find one who does. I would also recommend that you review your life insurance and ensure that your wills are up to date.

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