At age 75, Mr Wilkinson had a term deposit of $300,000 maturing which forms part of his retirement nest egg. He also has a managed share portfolio that provides him with income and growth. He was concerned that with interest rates falling to as low as 1.5% p.a. he could not live off the interest paid by the bank. After looking into various investment options including shares and residential real estate, he decided to invest in a commercial property syndicate. Based on advice from his financial advisor he became an investor in the Desi Place Limited Partnership.
Mr Wilkinson currently receives a pre-tax cash distribution of 8% p.a. on his $300,000, equal to $2,000 per month from his Desi Place investment. He puts $500 of this into another savings account to pay his tax. This leaves him with $1,500 net per month. If he had left his money in the bank for a term of 6 months at 1.5% p.a. he would have received $375 per month before tax – and it wouldn’t be paid to him until the end of the term. If he had purchased a residential property to rent out he would have had to pay management and maintenance costs, a stress he felt was simply too much at his age.
Mr Wilkinson is thrilled with his decision as he loves having a passive investment that pays him a viable monthly income to supplement his other investment income and government superannuation.
* Name changed for privacy reasons