My mother, who is 67, has just downsized. The difference between the sale and purchase price has left her with about $1 million. She is planning to put $300,000 into her super as per the rules.

That leaves her with about $700,000. Keeping this money in the bank means she is no longer entitled to the pension she was previously getting of about $1100 a fortnight. Is she better to live off the balance or should she invest the money in some other way?

Downsizing can be a great way to free up some cash but it can be difficult to know what to do with the proceeds.Credit: Simon Letch

Your question raises a couple of interesting elements. The first is that downsizing, while typically an excellent idea, does have the negative consequence of harming your pension entitlement.

Whether the proceeds go into super, the bank or some other investment makes no difference, they are all treated the same way under the asset and income test. The $1 million........

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