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  • Money Magazine

    Q&A

    Feb 26, 2020 8 minutes

    In building her wealth for the long term, Kate has to decide …

    How much risk can you handle?

    Q I’m in a position to pay off my mortgage a lot sooner than I thought I would and am unsure what to do to build my wealth. I want to make smart decisions that set me up for the long term.

    I’m 40, have $114,000 in super, $35,000 in shares (mostly Australian Foundation Investment Company and Vanguard’s MSCI Index International Shares – Hedged ETF) and can pay off my mortgage in two years. I’m self-employed and currently contribute the full $25,000 a year into super pre-tax, and intend to do this for the next 20 to 25 years.

    If I continue to work at the same rate, I can save an additional $6000 a month. I’m considering buying more shares in AFIC (or an ETF) quarterly to build a passive income in 15 years – or buying an investment property.

    Do I do one or both over a longer period of time? I’m not sure how I feel about more debt when I’m just getting debt free, but am not averse to it if the numbers stack up. How can I compare the options to make an informed decision?

    Good question, Kate. This is always a dilemma as it takes us not just to investment returns but investment

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