Hi all, I have $25k in savings. I am a 23 year old, single and have a full-time job paying me $65k. I have no knowledge of investing in shares and so far I have just been collecting the interest from ING savings account. Any helpful suggestions will be appreciated.
$25K in Savings, What to Do? 23 Year Old
Comments
I actually did not know about FHSS, that definitely looks like something to consider
Note that the government can rescind this in the future so make sure that you do want invest to buy property.
Also you need to read into it very carefully. Just from eyeballing it, it seems like you can release a max of $15k a year up to $30k total and it also affects your tax for the year that you choose to release the funds.
Show me the moolah first… :b
It was a joke🙄 A pun on his username.
I thought it was funny mate.
Thanks. Sometime I'm just too witty for my own good 😀
Maybe, haha. Though I'm pretty useless myself when it comes to username puns. ;)
Keep saving. Save as much as you can. Get enough to buy an apartment/unit without mortgage insurance (20% deposit) in an area primed for growth. Prices have gone down, interest rates are low - a rare opportunity.
The sharemarket won't rise by much in the next year or two, nor will property. But you can live in your apartment (or rent it out). The Index isn't reflective of the Australian reality right now, which worries me (it's feeding off US momentum) in the next 12 months. But compound ETF investing thereafter is a fantastic long-term approach.
I always believe your 20s are are for having fun and learning about the world, but the $AUD is down, so travel is more expensive than it has been.
Secondly, think about the long game. What are the skills you'll need to succeed in the world at the age 40? Will it be a second language, or a better degree? Looking back, this would have completely opened up my world - and potential earnings/lifestyle capacity.
Also - do loads of research. Start listening to financial podcasts (shares and property). Read Jan Somers books on property; read Barefoot Investing for shares.
You'll be crushing your peer group for financial freedom soon after.
TL;DR: I'd wait a a little while. Property is a decent bet at this moment, especially if you can get to the 20% mark. If you want to do shares, I'd wait for the upcoming market correction and go long on ETF (Vanguard) soon after.
Don't touch an apartment as they are a lousy long term investment. Go for a unit as with that you get some land, which is where the intrinsic value is in property
you mean townhouse ?
Only if it is on a separate title
+1 Buying a unit or townhouse was a great way to enter the housing market.
Mortgage is nowhere near as scary as a house, and something small is perfect to move into as a single or a couple.
less area to clean, less stuff to buy to fill the place, low/no garden maintenance.
The only downside is dealing with Strata.I agree. It means you can spend your time either working or having fun rather than doing chores.
I don't think I plan on buying a property for the next 5 years. Also with townhouses and units the ever growing body corp fee kind of puts me off. Your're right I do think before I start doing any serious investing I will need to do a lot of research. I invested $140 in crypto for fun back in 2017 and now I have $80 to show for it.
I recently graduated as a civil engineer and am lucky to have a job in my field. I have fairly middle-class dreams for myself. I think for now I will spend the next few months researching and using some of my money to fund a solo international travel.
ETF, compound interest, regular deposits = rich.
what if you have PPOR mortgage ?
how do you split the spare funds ?
I wish I understood you guys, looks like I have a lot to learn
dont worry, phunkydude's question doesnt make sense to me neither.
@dcep: Oh, yeah I understand.
You need an emergency fund. Multiple months of monthly expenses, thats either into your offset or redraw.
The rest could go into ETF..
If you thought about using your mortgage to invest, it's not the best idea because it creates a big paperwork mess when you do your tax.
You could look at debt recycling and borrow money to buy shares, the repayments would be what youre comfortable with, and you could take a bigger position than you could without leverage. (but you also take the risks).
FYI - not advice.
Coke and hookers
trying to cut back on sugar and the not really into crafting wood
Since you're into saving… Meth and pornography?
Leave it in the ING account until you do heaps research. Read finance books, watch finance videos, visit some finance focused forums or finance section of reddit or Whirlpool. Doing the same with basic accounting and understanding super will also help.
Financial education is what will set you up, asking for random advice will only get you so far.
You need to list what your 5/10/20 year goals are before you can decide which investment option is best.
I agree with your comments. I dont have any fixed goals for now. My current job is in a remote location and I plan on moving to a major city in abount a year or so. Once that is done I might be able to define my goals more clearly
Had the same convo with my son the other day, he's in the same boat. We have opened a trading account for him and I am steering him towards the Wilson LIC's but if anyone has some ETF recommendations that would be good for us to look at too. :)
For the OP, it's good to make a start now, reading up and learning is also good advice but until you put your money down there is a whole other side to investing that you won't get to know about. But if you take a long-term approach and don't borrow money until you are a VERY experienced investor then you'll do OK. Or do what I did at your age and spend it all on cars and junk and other crap I didn't need but wanted anyway and then struggle to catch up on 20 years time. (No, don't do that….) :)
I'm a long term Wilson investor in WAM/WAX and took a stake in WGB last year and topped up again earlier this year. Have you noticed that GW has been buying the global fund? That's a good sign.
PTM is way down but Kerr Nielsen sold a heap recently. It's always a worry when an owner reduces their stake but he had a divorce to deal with and his ex wanted cash to run her art gallery, etc. You are banking on the investment funds connected to the company to generate fees and that is reducing every month.
I'd look at IVV, MVA, VHY, VAP
My shares were overweight in finance and australian shares and I'm trying to diversify and transition to a dividend income stream so my recent purchases have been:
BLD
CAA
AWC
IVV
VTS
VESG
SSG
VAE
VAP
AGLNice, thanks. Yep have noticed Geoff buying WGB, I topped up a bit at $2.12 earlier on in the year and it still went down. Only a matter time before it catches up to it's NTA imo, so I'll steer junior into a that one as well. If you don;t mind a bit higher risk you could check out RGI and BDA as individual companies they both look good atm but don't expect growth to really take off for 12 months or so (barring any global collapse that is :)).
Whilst you are deciding, and for your emergency funds - get a better svings account. As you are under 25, you can put it in this one
https://www.boq.com.au/personal/banking/savings-and-term-dep…
The first 10k earns 3.5, the rest earns 2.5%. Better than ING's 2.3%
https://www.ozbargain.com.au/node/445043 has a good discussion of what is available
I did see that and was contemplating switching. Do you you can have multiple account with 10k on it? Plus I will be turing 24 in less than 6 months, is it worth the hassle?
It is up to your 25th birthday, so you have a while yet. You cannot have more than one account, but any amount above 10k earns 2.5% which is still more than 2.3%
I think it is always worth the hassle of switching - whether it is your phone provider, insurance provider, bank, whatever. People lose money on lots of things because they can't be bothered to move - see https://www.theguardian.com/lifeandstyle/2019/aug/31/ripped-…
To be good with money it is good to get into the habit of every year assessing every company you have a relationship with. Every bit of saving adds up.
If more customers were bothered to move to the best product more often, it would also encourage companies to innovate more often
Good advice! Laziness is my downfall.
Do what most your age do, quit the job and travel till your money runs out. rinse and repeat.
This is something I have been meaning to do. I do have few international travels coming up next year due to family weddings and all that. Looking forward to it
Vanguard ETF. I thought that's the standard answer on here?
Similar situation here, however with a possible recession looming, have been looking at the metals
What's everyone's thoughts on that?Reward yourself with a budgeted trip somewhere - Say max $5K. (life after-all is about balance)
And then continue saving, you'll thank yourself when you're older.
im 30+ and looking back, wished i saved more.
Pre-tax super contributions are another good idea for long-term planning, especially as your income increases over-time it becomes more beneficial to do it.
With Share investing, if you go down this path of investing in Shares such as ETF funds and the like, don't do this with ALL of your cash.
Not that investing is a bad idea, it's a great idea, but you never know when you may need cash for unexpected life events.
E.g. perhaps every $25k you save, then invest $5k.Do note that the income generated from dividends and such investments is extra income, so remember to keep funds aside to pay extra tax.
And re-invest those earnings (after tax) too, cumulatively increasing your investment is what will make it really grow.Same principle would apply with the deposit for a home loan - it's great to have the 20% home deposit in cash, but waiting until you had 25-30% available would be best so you that you have that 5-10% as a contingency if something happened after you bought the place.
Yes it's the safe path, however exercising patience with financial decisions like this will generally get you the best outcome.
Good luck mate!Wait for a trading offer on one of the trading platforms. There's always free trade offers but do your research first. Then just sign up and do it! Start off with small amounts. I started end of 2016 because Nabtrade had free trades for three months and my portfolio is up almost 40% since then. Now worth more than 50k.
Put $20k in an index fund - generally low fees, and low risk. Move the remaining cash into a better performing savings account, and continue to add to that. Use the savings account for your holidays. If you need more cash, can withdraw some funds from the fund. If you have extra cash, can add to the fund.
I'll just say that if you have the work ethic and budgeting ability to save that now, and you actually want to go travel, you may as well do it.
You can save that amount again, and your youthful and enviable interests in the world, such as travel, will likely decrease over time.
Enjoy your 20s, you've got the rest of your life to make and save.
Otherwise, etf and high interest savings.
Buying?
Buy land in an area of your dreams or buy an Industrial lot to make your dreams come true.Housing might implode. Or not, but it is already too high. Higher? May be. But probably lower.
And sorry to burst your balloon but $25K is pretty much nothing.
Well done but it is not commendable.
In particular if you are in $65K.all on black
If you let me hold that money in my offset, i'll give you 2.5% pa interest for it :p
else look at investing into an ETF if you dont need the cash in the medium term.
If you do (like a house), then keep it in cash or put it into your super for FHSS.