To start, I would make the comment that you have several very important financial issues to develop a strategy around, which will go well beyond the scope of this exercise, and I would strongly recommend you arrange an appointment with a CFP® Financial Planner to discuss this in person.
I would think you have several major financial goals, and in a time line sense these include, providing a possible private education for your children, paying off your home loan, and then having enough residual assets/superannuation to fund a comfortable retirement.
It would very useful to know what your overall budget for cost of living per annum (best estimate) is, and also the exact expected school fee bill is (i.e. what years will the children go to private school, where will they go to school and what would this cost if it was today and so on). This would enable you to work back to what amount is needed, and do we have enough/are we saving enough to cover this.
A major issue you should consider as a first step in your financial plan, is your personal insurance, as all your future financial plans will be compromised, if you pass away prematurely, or lose the ability to earn your income (through illness or injury).
I think given you have a potential private school bill, you should aim to retain some savings towards this, and the funds in the offset account could be earmarked for this purpose. If the school fees are to begin in a short time frame (i.e. within the next five years) then leaving them in cash is perhaps the safest option (and by leaving them in the offset account you are saving interest on your home loan). If the school fees are to commence in a longer time frame (seems unlikely given your children’s ages) then some other form of investment strategy for those funds could be discussed.
If after working through the school fee savings issue (as the first issue to resolve on the timeline), you then still have some surplus saving capacity, and you could consider some salary sacrifice to your superannuation. This could be quite tax effective for you, as your in the 38.5% marginal tax bracket with an income over $80,000, and salary sacrifice contributions are instead taxed at 15% going into super (if within the allowable contribution caps). This would save you tax and also help to build your super balance more aggressively. You should also review your super fund and the underlying investment options.
These are a very broad overview off some of the issues you could work towards planning for with a CFP® advisor.
By Joel Bones CFP®