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A Fin24 user who had to stop working at 50 is looking for a fixed monthly income without too much risk. She writes:
I have had to stop working due to early onset dementia at age 50.
I have sold my office and will be netting about R900 000 (after capital gains tax).
My current income is from an income protection policy paying R10 000 per month until the age of 60.
I have two investment properties with tenants covering the bonds, rates, etc. From these I realise a small net income of R5 000 per month.
My home is bond free and I own a debt-free vehicle .
I am in a quandary as to where to invest the proceeds from the sale of the office.
A monthly income is of paramount importance now. I would like high returns, but low risk. - everyone's dream investment no doubt.
Can you guide me at all?Dr Chris van Wyk of PSG Hermanus Portfolio Management & Stockbroking responds:
Finding appropriate products for investing R900 000 should not pose a problem, provided you have clarity about the investment risk that you could take on.
Investment in appropriate unit trusts - such as a balanced fund for an investor with a moderate risk tolerance - is suggested.
Do seek the advice of a competent investment adviser. Advisers usually charge a front-end fee as well as ongoing advisory fees.
Platform fees usually apply for unit trust investments and the fund managers of unit trusts charge fees. Such fees can show significant variations between service providers.
Make sure that you are being charged reasonable fees in all cases.
However, pertinent other questions need to be addressed if you really want financial peace of mind. Among these are:
* When will the bonds on the investment properties be repaid?
* Are your rental contracts properly structured?
* Who will take care of your affairs once dementia renders you incompetent to do so yourself?
* Is there adequate financial provision for future medicare and, if not, how could that be achieved?
* Is a home (presumably freehold in a residential area) your best accommodation option (also from a financial point of view)?
To find an appropriate solution for your unique situation requires an investment/financial plan based on a thorough evaluation of your needs, risk tolerance, financial constraints and related considerations.
My considered guidance is to avail yourself of the services of a reputable investment/financial adviser.
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