Ask Paul: We have $550k in an SMSF making just $23 a month

My husband and I are retired and still have two adult children at home. We have $550,000 in self-managed super, which is just sitting in our Commonwealth Bank account, on which we received a return of $23.37 for January 2021.

We also have $235,000 in cash that we are using for income at the moment, but we are going through it.

We also have a unit on the coast. It cost $330,000 and is returning about $1500 a month, but we still have rates and body corporate fees of $10,000 for the year to take out. We just don't know what to do with our money. - Karen

My inbuilt alarm has just started ringing, Karen. I'm glad you got in touch. $23.37 for the month on $550,000 is indeed alarming!

Cash is a funny thing. It is without doubt one of our safest assets in the short term, but one of our worst in the long term.

As you know, in a decade or so if it is left there and you only spend the miserly interest, you will still have $550,000. Its buying power, though, will be terribly damaged, even with inflation at a couple of percent. Compound this annually and you have lost about 25% of the money's buying power.

And then you have another $235,000 that is supporting your spending needs.

Stay in this position and I imagine with low returns on cash and your spending from your cash savings at the qualifying age you will deplete assets to the point where you will get a part pension and eventually the full pension. This is a valuable safety net.

Your investment situation is just too important to your future to have me dithering around with it in a few hundred words.

So, while I like to answer readers as well as I can, I really want you to go and see a fee-charging, independent adviser.

Your friends or super fund may have recommendations. Or call the Financial Planning Association and go and see a certified financial planner (CFP) - there will be one not too far from you. Don't hesitate to have an introductory chat with a few because you need to be comfortable.

My general view about my money is that the good old third-third-third approach is a pretty good start: a third in property, a third in shares and a third in cash and fixed interest is really not that bad.

A good adviser will give you personalised recommendations. That, of course, will include your coastal property, which I hope is benefitting from the boom in regional areas.

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