Best Way To Gain Money (Lump Sum) Also extremely low risk of losing it

revo on 19/06/2013 - 22:37
Last edited 23/06/2013 - 01:03

Hi guys!

I have a lump sum of money which my mum had saved up for me through AMP and I was wondering what was the best way to get the most out of it as I do not see use for the money any time too soon. I've heard term deposit for bank gives some decent interest rate and also it seems pretty safe. Also when I say low risk I mean as low as if power blacked out and data gets erased. Shares are probably too risky and I do not want to lose this money. (Perception changing after feedback)

Thanks!

Extra details:
Amount: $20k
No Mortgage for me or my parents
I am 20 y.o.
Not looking to use the money within next 5 years. Probably 7-8 years later is when I will use it.

Reading through the comments there seems to be a good suggestions for investing in banks, although I have close to 0 knowledge in share as I have never bought any.
Extra Questions:
CPHO recommended Commonwealth Share Pack; is that a safe investment? https://www.comsec.com.au/Public/Products/SharePacks.aspx
Also theophilusthistler and a few others recommended Managed Funds/Index Funds. Which I have never heard of but from your words it seems relatively safe

Also are they quite simple to manage, do I need to keep an eye on them? Is there a particular amount of time I should invest for? Risk factor? Is it worth the risk for the gain compared to a term deposit? Term deposit for 5 years seem to be 4.3%pa Roughly.

Pistep has recommended I invest in the big 4 banks which seems like a pretty good idea and relatively safe as well. Commbank, Westpac, and ANZ seem to have performed quite well in the last 10 years whereas NAB seems to have remain quite stationary. Thoughts on investing in the big 4 banks? Also when you invest in the big 4 banks do you invest in shares they own or do you invest in the bank itself?

Financial

Comments

  • Slo20 on 22/06/2013 - 09:56

    I would not recommend investing in gold. Gold is a safety net for investors when the stock market is declining. Most analysts suggest gold will drop to $1000/oz. IMO managed funds would be a good investment. You can research the managed fund that appeals to you and can research there track record (www.canstar.com.au is a good place to start). The stock market is not necessarily a low risk investment but a managed fund diversifies your investment across all the sectors which reduces risk incase one sectors drops. Also as you are only 20 you have time to ride out your investment. The stock market goes up and down and your only behind if you sell when it's down. I would also reinvest the dividends back into the shares which will help further increase your share portfolio.
    I am speaking from experience and not as a financial advisor. I have owned gold, silver, platinum and palladium and sold them all when they were at their peaks. I currently have managed funds (2 funds) and own a diversified portfolio of shares (some which have been bad investments others that have gone up 800%).

  • [Deactivated] on 22/06/2013 - 21:04
    -2

    bitcoin.
    Market cap up +2000% in 12 months
    http://blockchain.info/charts/market-cap

    oops, sorry - just saw the other requirement for low risk. best stay away then :)

  • cloudy on 23/06/2013 - 08:11

    So many comments, but I haven't seen ANYONE name the safest investment known to finance, and that is risk free government bonds, soon to be released to retail investors via the asx. When you buy them, ur returns will be GAURANTEED, for the life of the bond, and the government will not default. Even banks, as small as the chance is, can default, think of Greek banks where it has already happened.

    Just another option, but not one I would take. I'd prefer a business like Woolworth, where I know the more I eat the less chance I'd lose money lol, and I won't ever stop eating, nor will 22m other people.

    • May4th on 23/06/2013 - 14:00

      you have two choices, either stick with what you know and go for a low risk/low yield option like term deposits, or govt. bonds etc.

      see above

    • Cheap Steve on 23/06/2013 - 17:37

      Good suggestion about government bonds. The problem at the moment is that a 10 year bond is paying just over 3 per cent. You can receive better interest in term deposits and with the government guarantee the same level of risk.

    • Davidius on 25/06/2013 - 11:08

      yes that is all true and im all for bonds but government bonds dont pay well unless the country has a serious credit problem and they desperately need money which usually makes them very high risk countries of the likes of Greece. It is bit of a gamble cause countries which are well performing and reliable like Germany wont make you a return but it could in fact cost you to store your investment in German gov. bonds. The only way to play on the bond markets would be if you are if you follow the loop closely which the OP clearly doesnt have a taste for.

      westfarmers the owner of coles,k-mart,target and who knows what other giant tear a 'whole' into whoolies with their gigantic and infectious DOWN,DOWN,DOWN+flybuys marketing campaign on whoolies. I couldnt be bothered looking up figures but I know for a fact that during the period of this campaign coles outperformed whoolies in most if not all indicators e.g.: they grew market share, increased profits etc..

      Im trying to say that coles has been everything in that sector for the last 2 years so while whoolies sold DSE and trailed coles in almost everything. If and when whoolies will up the anti and launch a marketing campaign of similar magnitudes it wont be such a good investment for a short -midterm at least (they have bigW and 1000's pokie machines so the whoolies group is a strong package just isnt at max potential ATM

  • cloudy on 23/06/2013 - 08:15

    Oh as for ur question on banks being safe investment stocks. I'd say yes they are, but be careful of paying too much. I've been reading like 3 articles written a week about how someone thinks they are over valued and will fall in price.

    • Cheap Steve on 23/06/2013 - 17:20

      Our "blue chip" banks are a license to print money in the good times. Fortunately, Australia has not had a serious recession since 1991. However, should good times go bad then banks are one of the worse investments you could hold. As banks basically hold everyone's debts if people start losing their jobs then they start defaulting on their loans and banks rack up large bad debts which kills their profits and share price. Given it has been over 20 years since the last recession there are two generations of Austalian investors who have not witnessed this part of the economic cycle. However, if you have any friends in the US or UK then ask them about their experiences with bank investments over the last 5 years.

  • inherentchoice on 23/06/2013 - 08:29

    17% guaranteed tax-free government contribution in a first home saver account is surely the way to go.

    If I were you I would get in now and open a first home saver account before this Thursday 27 June and put $6000 into it, that way you already get one of the minimum four years out of the way.

    Then in July the $6000 becomes $7020! That makes it a 17% return in one month, which is technically like 200% per annum!!! Guaranteed.

    PLUS the bank gives you interest on top of the government guaranteed 17% contribution, and the bank's interest is only taxed at 15%, a lot less than most marginal tax rates.

    The editor of money magazine (a man with 6-figure investment income), was on radio the other night and agrees.

    https://www.moneysmart.gov.au/managing-your-money/banking/sa…
    http://mebank.com.au/personal/bank-accounts/first-home-saver…

    • May4th on 23/06/2013 - 14:04

      i wonder what changes will be in when the coalition govt. takes office

    • cloudy on 23/06/2013 - 20:18

      Make money on the government and lose money on the house, good luck.

  • Mastermind on 28/06/2013 - 09:40
    +1

    Crown Casino

  • altomic on 30/06/2013 - 21:10

    blue horseshoe loves anacott steel

  • [Deactivated] on 22/06/2021 - 11:00

    So, tell us how much is that $20k now after 8 years?

    • Car-la-la on 22/06/2021 - 11:04

      I love that you've found this thread after 8 years!

      I'm actually interested to hear the answer (and if I'm super bored, read over some of the advice op received and see if people's predictions came to fruition)

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