What’s the best way to invest half-a-million dollars in international shares?

My husband and I are 35 and 36, and have recently paid off the loan on our $2 million home. We have $4000 each month to invest, plus up to $450,000 from the home loan as we have not closed this account. We salary-sacrifice the maximum into superannuation, hold cash for our young children in high-growth insurance bonds, and have a modest, diversified Australian share portfolio. We are aware that we need to diversify and would like to move to international shares, but are not sure of the best way to do this. What would you suggest – direct investment, ETFs or a managed fund with 100 per cent international shares?

Having tried direct international investment myself, I do not recommend that. There is a heap of paperwork involved as well as withholding tax. I think your best option is an Australian-run international managed fund.

A good adviser can help you choose one that suits your goals and risk profile. You are in a great position and could think about using the undrawn loan to buy more Australian shares.

Interest would be tax-deductible. An index fund would be perfect because you would have the benefit of franking and diversification without having to try to pick winners. Remember the Australian All Ordinaries has averaged 9 per cent per annum for the past 120 years.

I’m writing on behalf of my daughter. She has not married her partner of 30 years but believes he will be entitled to her super if she dies first. They have no children. Should he die before her, how can she leave her super to her nieces and nephews?

The trustee of her superannuation fund will decide who gets the money. If there are specific people to whom she wants the money to go, she should complete a binding death benefit nomination to the trustee and lodge that with the fund. This is not a simple matter, so she really needs to talk to an estate planning specialist.

Nephews and nieces are not dependants under the Superannuation Industry (Supervision) Act and the trustee can ignore the nomination. Furthermore, the partner has more claim to her super as a “de facto spouse”.

A better option may be to have a binding nomination to her estate, with her will then favouring her nieces and nephews. A further complication is there will be a death tax if they are non-dependants. Just bear in mind that some binding death benefit nominations need to be renewed every three years, or they will lapse.