UPDATED: $75,000 of savings - How would you invest it?

LTed Mosby on 27/05/2014 - 23:45
Last edited 02/06/2014 - 19:12

Update: 2/06/2014

  1. As suggested by paulsterio and others, today I have purchased $15,000 in an ETF that tracks the ASX200 (ASX:STW). So I have $60,000 in saving left.
  2. Subscribed to money magazine for some light reading (currently $3/3 issues, then $13.50/3 issues there after)

Next steps:
Looking for a 300-350k investment property around Melbourne to lease out.
Looking to invest in shares more geared towards dividend payouts.
As always, suggestions/opinions welcome.

Original Post: 28/05/2014

I have been putting money away for the last 2 years and now have $75,000 in a savings account (CBA Goal Saver) that I would like to invest.

I am 24 years old, still living at home. My outgoings basically consist of myki(public transport), phone, foxtel, gym, petrol, girlfriend. I am able to save an average of >$650/week (slightly more than half of my net pay).

I am going to be seeking professional advice from a financial advisor in the next couple of weeks. (pm me if anyone can recommend someone in the Melbourne CBD).

So my question is: How would you invest $75,000, and what what type of realistic return would you expect from your suggestion?
Would love to hear the opinions of the OzB Community.

Cheers
Ted Mosby

Financial

Comments

  • ProspectiveDarkness on 28/05/2014 - 00:00
    +14

    You should invest in a house in Westchester and renovate it. If you start now, you'll be done by the time you and the old wifey are ready to move in.

  • rambutann on 28/05/2014 - 00:04
    +2

    UBank USaver Ultra.
    If you deposit your salary/$2000 a month they will pay you an interest rate of 4.37% which equates to $273 a month/$3,277 a year/$9 a day.

    Basically do that or buy a house lol

    • shortgum on 28/05/2014 - 06:41

      Mebank 4.6% would be better option than Ubank 4.37% here

      • adante on 28/05/2014 - 10:44
        +1

        This is only available for first five months then drops to 2.9%. I haven't crunched the numbers but I believe you'll be behind in a year.

        You can shuffle it around after 5 months but the difference end up being is quite marginal - particularly when factoring in the time lost during transfer.

        • deltabay on 28/05/2014 - 21:57
          +4

          Completely disagree with adante. You should shuffle it around after 5 months. You don't lose time on the transfer if you schedule the transfer to go out on a certain day in advance as it leaves first thing in the morning and arrives before the day is over. Also, you will be support ME Bank for 5 months who is a smaller mutual bank.

          The difference in money, using the net present value formula to take into account monthly compounding interest for the 5 months is:

          ME Bank: 75000(1+.046/12)^5 = $76,448.56
          Ubank: 75000(1+.0437/12)^5 = $76,375.61

          That is a difference of $72.95 for very little work.

        • shortgum on 28/05/2014 - 23:53

          I agree with deltaboy on this

        • ronnknee on 29/05/2014 - 08:39

          Good thing you have some numbers to show, even though they are an estimate. Banks compound per day so realistically the numbers are higher by a bit (ie. in your favour) but the difference should be around the same.

          ME Bank: 75000(1+.046/365)^152 = $76,450.47
          Ubank: 75000(1+.0437/365)^152 = $76,377.29

          Difference: $73.18

          I'd say the transfer is definitely worth it.

        • sparkles on 29/05/2014 - 09:13

          This is assuming the interest rate at UBank is still 4.37% in five months time. The only way of knowing is looking at the interest rates of all your options/promotions when the five month time period is up, maybe even earlier, who knows what can happen.

        • gummibears on 29/05/2014 - 11:07

          When transferring money from one bank account to another (different institutions), is there a limit imposed? I.e. Is he able to transfer $75,000 in one hit? I thought there was a limit so that people who have their accounts compromised don't lose all their money suddenly.

          I only have bank accounts with the same institution so I am unsure.

        • ronnknee on 29/05/2014 - 14:06

          I just had a look at ME Bank's rates.

          https://www.mebank.com.au/pages/rates/personal-rates/

          2.90% p.a. Variable Base Rate
          1.70% p.a. Super Savings Bonus Rate#
          (Bonus offer expired 31/03/2013. Bonus Rate for eligible accounts 1.60%*)

          I think the interest rate is just 4.5% pa not 4.6%.

        • adante on 30/05/2014 - 23:46
          +1

          What mechanisms do you use to schedule the transfer? I have never used ME Bank but from personal and friends' anecdotal experience with large cash transfers with UBank and RAMS this is not a sure thing; although I'm certainly open to the possibility that ME Bank is different.

          I've personally been burnt by UBank messing up a transfer to RAMS. The moron on the phone keyed in the wrong amount, which for whatever stupid reason left my entire bank balance in the aether for a few days earning nothing. Then once I found out I had to repeat the entire process. And then it still took a couple of business days to transfer to RAMS.

          For me, factoring in the the time spent faffing around trying to transfer, and the potential risks involved if it doesn't go smoothly (or alternatively the further time spent attempting to pre-empt that), I really did consider it pretty marginal for <$100. But I can appreciate that this sort of attitude is pretty anathema on ozbargain :) Modz pls don't ban!

        • Agarwal on 01/06/2014 - 10:20

          Not sure about ME but with Ubank I think it's 20k online, you can do more to a linked account if you call them up and speak to them.

    • Ted Mosby on 28/05/2014 - 07:44

      I'll check it out. My current account goal saver is currently only 3.81%

    • dd22qq on 28/05/2014 - 13:39
      +3

      Say what?

      $2,000/month @ 4.37% p.a is around $1,048.80 a year, $87.40 a month, $2.87 a day.

      • [Deactivated] on 28/05/2014 - 13:45

        There is a reason the rate is so low, because of the risk level of the investment, almost next to none.

        • dd22qq on 28/05/2014 - 14:08

          Wasn't suggesting UBank wasn't the way to go, only questioning the number crunching.

          In fact, my figures were still high. $2,000/month compounded monthly @ 4.37% is around $575 interest after the first year.

        • bargainjargon on 28/05/2014 - 15:59

          I think he was using the $75000 that's gonna be put on there. I thought the same too when I first saw his figures but then I realised I wasn't taking into account the 75k.

  • Devils Advocate on 28/05/2014 - 01:30
    +12

    If you don't need the money in the short term - shares. Outperform every other asset class in the long term. If you plan on needing it in short term (to buy a house etc) high interest savings account is probably your best bet.

    But yes as always, don't listen to the internet professionals. Get real advise, especially with that amount of money.

    • Ted Mosby on 28/05/2014 - 07:40

      I don't need the money short term. I'll start saving separately now for a house (to live in) deposit.

      • ESEMCE on 28/05/2014 - 09:10

        If you're reasonably settled, your employment is secure and you're unlikely to be working consider buying a house for you to live in in the future, but as an investment for the time being.
        You'll get all the tax advantages of negative gearing for the first (and most expensive) years of the loan. You can claim all the costs of any renovation before/during the rental rather than sucking up all those costs yourself when you move in. Plus extra income to pay down the loan faster.

        • bossmode on 28/05/2014 - 10:32
          +6

          So at Ted's age, forgo stock investment and buy, not rent a house. That seems to be OZB's consensus?

        • ESEMCE on 28/05/2014 - 12:40
          +2

          Depends..
          Buying a house to rent and then live in is a great way to get yourself into the housing market. Provided you're confident you'll live in it down the track.
          If not so confident, I'd put it in shares.

        • bossmode on 28/05/2014 - 12:42
          +4

          So the cheat sheet would be as follows:

          1. Acquire house/unit
          2. Rent house/unit to others
          3. With the assistant of incumbents, pay off the house/unit
          4. Once paid off, live there yourself
          5. The cycle continues - Use the profits to acquire house/unit

        • tohara on 28/05/2014 - 17:06
          +3

          you can't claim the cost of a renovation, they're capital in nature and will come off the sales proceeds when you sell the property

        • spoonmugen on 28/05/2014 - 18:57
          -2

          depreciating/diminishing assets by the time you take ownership as your principal place of residency you can pretty much write them off

        • tohara on 28/05/2014 - 19:32
          +1

          You could potentially write them off as repairs and maintenance but there's no disputing they're capital

        • sparkles on 29/05/2014 - 09:16
          +1

          It would depend, I can't imagine they would class paint, replacing old light fittings etc as capital? A new deck and pool definitely.

        • manno786 on 30/05/2014 - 07:24

          Capital expenditure that should be capitalized in the cost base of the house instead of expensed should be 10% or 20% of the house value, its a fairly big amout not sundry expenses like painting etc

        • ESEMCE on 02/06/2014 - 13:27

          I've used the term Renovate to mean repaint and carpet/curtains (not knock down walls etc).

  • shortgum on 28/05/2014 - 06:43
    +11

    you rate girlfriend is an outgoing. lol

    • Ted Mosby on 28/05/2014 - 07:36
      +60

      If i didn't, i'd have more savings

      • [Deactivated] on 28/05/2014 - 13:12
        +7

        Hey they are cheaper than you know what for the long run, + companionship, unfortunately gf also requires emotional investment and 24/7 care. Reasonable value though. I'd say the following figures are reasonable…
        First 3 months: Approx $300-600/mo; Next 3 months: $200-400; Last 6 months: avg. $200/mo.

        In the long run you can potentially save money.

        • you can live together
        • you could share a car/transport costs
        • you can buy groceries/take-out in bulk
        • no need to pay for other services any more or play the club game
        • bossmode on 28/05/2014 - 15:40
          +5

          They are the initial catalysts for zergs, though. So be wary of what you're getting yourself into.

        • LincolnLenny on 28/05/2014 - 17:37

          Last 6 Months: avg. $200/mo.

          Is this a warning to stay about that $200 mark?

        • shortgum on 28/05/2014 - 19:16

          just keep in mind girlfriend they can still leave you any moment in life

        • [Deactivated] on 28/05/2014 - 21:22

          Buy her a ring. Get her to sign a pre-nup.

        • garetz on 29/05/2014 - 03:08
          +2

          They are cheaper until you get married then the inevitable divorce.

          So in the long term they cost you half.

        • eurofoti on 29/05/2014 - 09:40
          +8

          It's another risk investment I guess. Talk to your financial adviser. Or read Cosmopolitan.

      • Dollarsandsense on 01/06/2014 - 22:19

        Well that depends on how many drinks you have to buy at the bar in pursuit of the next one :-)

  • cloudy on 28/05/2014 - 07:57
    +6

    Watch four corners CBA financial planner scandals and you wouldn't want to seek "professional" advice. They are sales man introducing u products that line their own pockets.

    Do yourself a favour and slowly read up yourself on what suits you.

    I agree with the long term = shares, but don't go for banks, skeleton in closets waiting to be exposed. Go for supermarkets and telecommunications where income and profit and dividends are always steady.

    • p1 ama on 28/05/2014 - 10:09
      +10

      Going for shares in one business line is pretty stupid and I wouldn't do that.

      It goes against any sort of financial sense in that you should always invest in a diversified portfolio.

      • Almost Banned on 28/05/2014 - 14:18
        +5

        I'd be considering index funds - but don't listen to me, the OP has got more saved then I have so maybe I should be listening to Ted Mosby.

      • cloudy on 28/05/2014 - 17:03

        lol, i would go into a debate with you, but i did read you have a Bcom in finance ( have a masters in it btw). But i will say this, warren buffett (someone i qoute way too often) would tell you that any educated investor would not, and should not diversify. Any invest and forget investor, should get into index fund and forget.

        Now, i suggested OP get educated and don't diversify. And i think it is still sound advice. Inspite of what the books says. I still tutor finance part time, i do it coz its easy, that money i make goes into a very concentrated share portfolio of awesome stocks, I don't look to diversify at all. Get yourself into some bad diversification like a NAB and coles/myer, telecom australia back in the 90's/2000's and you would have had eliminated all systematic risk and still have failed.

        OP: don't trust a financial advisor, and don't trust someone who has studied finance and blindly believes in it.

        • p1 ama on 28/05/2014 - 17:42
          +5

          I'm not going to debate this, because my area is asset pricing and corporate finance rather than investments and portfolios, so I'm not saying that I'm any sort of "expert" on investments, however, I think you're misunderstanding what I'm trying to say.

          I'm not arguing against "picking stocks", there are fund managers who make a career out of picking stocks and outperform index funds year after year. There are investors such as Warren Buffet who have made a lot of money through value investing, but most investors are not professional fund managers nor are they Warren Buffet.

          Whilst it might be good for someone who makes daily or weekly trades to "pick stocks", most "mum and dad" investors don't have the capacity to "pick stocks", because of the amount of time and effort it takes to get educated about finance and to follow and understand the vast amounts of information coming out daily. I spend at least 30 mins to 1 hour regularly reading the AFR and researching stocks and investments.

          Even amongst you and me, as people who are Finance qualified, we would know more than the majority of people out there who are looking to invest. Most people don't follow financial media every day, most people wouldn't be able to look at the statistics for a share and understand even really basic stuff as the P/E ratio and understand why bank shares (at the moment) are very overpriced.

          I agree with you, if you pick stocks and you're good at it, you can outperform indexes, but is picking stocks the way to go for someone who is new to investing and probably is looking for more of a "set and forget" investment? Probably not. That's why I suggested an ETF which tracks a market index in my post.

        • Diji1 on 29/05/2014 - 23:15
          +1

          "there are fund managers who make a career out of picking stocks and outperform index funds year after year."

          Care to name any? As I understand it this is a trait that is exceptionally rare over anything more than a short time period if you look at historical figures. Like most people would be better throwing darts at the stock pages except for literally a handful of people (Mr. Buffett being among them).

          My suggestion FWIW is index fund. But really study up yourself, it isn't rocket science.

    • Ted Mosby on 28/05/2014 - 12:48

      Cloudy, Ok ill try and watch it online somewhere.

    • mskeggs on 28/05/2014 - 13:19

      Must agree that financial planners are really only useful for people who are clueless and lazy.
      Do some reading then talk to an accountant for tax advice to set your decided path up most effectively.

      • Cheap Steve on 29/05/2014 - 13:35
        +1

        "Clueless and lazy" covers 90% of the Australian population when it comes to investing. I'm not expecting financial planners to go out of business anytime soon.

      • gk0r on 29/05/2014 - 14:14

        "Must agree that financial planners are really only useful for people who are clueless and lazy. Do some reading then talk to an accountant for tax advice to set your decided path up most effectively."

        I don't even know where to go with this one. Seriously… with that kind of logic…
        You might as well skip the accountant step on tax advice, after all, you can do some reading yourself can't you? And while you're at it, don't go to grocery store - just grow some of your own vegetables and eat what you grow. Also, disconnect the main power, go solar, in the spirit of such full self sufficiency of course. But before you do that - first do some more reading and work out how to build a solar panel. Why buy something you could probably make yourself?

        Really…

        • deal seeking missile on 29/05/2014 - 22:37
          -1

          you should look up what the 60 minutes dug up about financial advisers. plus you could just go and listen to what they say and then go do you own thing

        • Almost Banned on 30/05/2014 - 12:52
          +1

          Sure some financial planners are just going to spruik for whatever products give them the best commissions and put you into products based on how much they pay the advisors - but some will actually consider your goals and risk profile and advise accordingly.
          Finding one in the latter category rather than the former is the key.

        • gk0r on 31/05/2014 - 02:01

          And what expose did 60 minutes (a quality and objective program that it is) put together about landlords?

        • ExtraSalt on 03/06/2014 - 11:01

          ye, my sister works for Colonial First State. She and other Financial Planners regularly get checkup in regards to giving the customer the right information rather than what would give themselves the better commission. i guess thats a step in the right direction

  • meowmeowmeow on 28/05/2014 - 08:25
    +1

    A financial adviser will charge you for the advice and the management fees of what they recommend could eat into your profits, so make sure they recommend something suitable…do your research before you go and have an idea of investments you like the look of. I'd suggest shares are the best option for long term, or to keep the fees down you could invest in an index fund…basically a managed fund designed to follow the index so there's less turnover, less CGT and less fees.

    Or you could throw it in super, but you're only 24, so that's a bit of a long wait to get it back :)

    • Ted Mosby on 28/05/2014 - 13:00

      Super? "Ain't no body got time for that"
      Can a financial advisor suggest what shares to purchase? Or is that more of a broker type role.

      • mskeggs on 28/05/2014 - 13:23
        +1

        You can get advice like that from a broker, but you probably would be better doing your own research, as brokers will tell you to buy what they want to sell!
        There are various research services, but from your questions I would advise:
        - keeping your savings in the highest yield saver for the next 6-12 months.
        - read the Age money pages for a few months
        - get a subscription to money magazine
        - get one of the path to wealth style books written by an Australian (Paul Clitheroe seems reasonably sane, Ross Greenwood marginal)

        Once you have done that little bit of research you will be up to speed to know the questions to ask!
        Otherwise, a financial advisor is just going to crank out vanilla advice for you and skim their fees - a poor deal.

      • abc on 28/05/2014 - 17:48
        +3

        The worst thing you could do with your savings at that age (or anyone id say under 50-55) is put extra money into super. Sure you save tax on contribution but you also hand "control" of your money to the federal govt. The goalposts will always get moved. Bet they will raise the preservation age and the tax on redemptions when you are ready to retire. Oh and I'm not even started on changes to super allocated pensions to avoid tax or gain the age pension.

        Never do something just to gin a tax advantage :-) this includes negative gearing :P

        • sparkles on 29/05/2014 - 09:20
          +1

          Sort of have to agree, by the time we are all old, it'll be age 90 before you can access your super, and 100 before you're entitled to a pension.

  • bajillionaire on 28/05/2014 - 09:46
    +4

    With interest rates so low you should be looking at property in Sydney or Melbourne. Something that will be positively geared after interest-only repayments are taken into account and which will appreciate in capital growth as well. If you can find something that fits this criteria for $500k, you'd outlay a $50k deposit with a 90% loan (if the property gets valued at $500k of course). That leaves you $25k left over for stamp duty, fees, light renovations etc.

    Sit on this property for 10+ years, if you have made a good choice then it will hopefully have gone up to $700k in value by the time you sell. If you have made a good choice the rent will have negated all or most of your repayments and other costs. This means that your $50k deposit has netted you a $200k return, or $150k profit.

    This is a simplified suggestion and outcome of course, but illustrates the gist of how the financial return on property investment works.

  • p1 ama on 28/05/2014 - 10:04
    +35

    You can see a financial advisor if you want, but believe me, they are actually quite biased. I actually had a lecturer at uni (did a BCom in Finance, so I guess I know what I'm talking about) who would tell us about how financial advisors receive commission from the companies which produce investment products. Essentially, if you go to them, know that they will be advertising rather than giving you truly unbiased information.

    In terms of what you should invest in, it really depends on what you are trying to achieve. At the moment, with interest rates so low, it almost makes no sense to invest in any fixed income securities, whether that be bonds, mortgage backed securities or bank term deposits.

    A lot of what you should do depends on what sort of risks you want to take on and what sort of investments you are comfortable making. If you are looking for a "quick and easy" investment that is very much like putting money in a bank, then sign up for CommSec and invest in several ETFs (diversification is always better). I have holdings in two ETFs, STW and SLF, which are ETFs which track the ASX200 index and the ASX REIT index. There are also other ETFs which track indicies of international shares and stuff like that if you want to diversify your holdings more.

    The benefits of ETFs:

    1. Low entry costs - brokerage is very cheap at only $20 per trade
    2. Easy to invest - takes 5 minutes, you can do it from your computer
    3. Not a lot of research needed
    4. Good outlook for returns post-GFC and medium risk
    5. ETFs generate, on average, around 12% yearly

    Of course, the disbenefits of ETFs are that you can only invest with your own equity, unless you are looking into margin lending, which I would highly advise against.

    The other option, as others here have mentioned, is to get an investment property and rent it out. The benefit of an investment property is that you borrow massive amounts in order to buy it. When you leverage an investment, guess what, you increase your expected returns. Property is much lower risk than shares, however, the residential property market can be unpredictable and subject to the boom and bust cycle, which is something you should look out for - i.e. don't buy at the height of a boom, don't sell at lowest of a bust. Property, on average, generate around 8% p.a.

    Of course, the downside of property is that it is high-maintenance, it's difficult to go out and look for property. It's also expensive to get into property because of how high stamp duty costs are - these are costs you'll never see again (much like brokerage fees) and on top of that, unlike shares, property require ongoing maintenance, not to mention that you'll have to deal with idiotic and difficult tenants from time to time and a host of other issues that make investment in property more of a chore.

    You can do more research or reply back here and I'll try and help you out. It's hard to say more, because I'm not sure what kind of investment you want.

    But if there's some general advice I can give, probably the most important thing learned from uni doing a degree in Finance, is that:

    1. Investing is to achieve the highest return possible for a unit of risk. If you can achieve a higher return elsewhere with lower risk, then you are not investing in the right place.
    2. Trading is where you use your knowledge to outplay the markets. Financial analysts do this, they use mathematical modelling and other tools in order to "beat the indexes", so their portfolio can perform better than the ASX200 index or whatever other benchmark, whilst not bearing significantly higher risk. Essentially, what this means is that they are willing to expose themselves to certain risks to reap benefits, but they are well aware of that and it is controlled.
    3. Gambling (i.e. stupidity) is investing on pure speculation rather than a principled investment plan. Essentially, when you listen to people telling you to invest in ONE PARTICULAR STOCK because "it should increase in price", then that is gambling and you shouldn't listen to people who tell you those things. The benefits of holding a diversified portfolio…etc. are mathematical, meaning that you are essentially gambling with your savings should you choose to invest on speculation.

    Anyway, hope I've helped and good luck in your investment endeavours.

    • jdf on 28/05/2014 - 12:07
      +1

      Thanks paulsterio, very helpful.

    • Ted Mosby on 28/05/2014 - 12:39
      +1

      Wow, thanks for taking the time to write all that. Very helpful.
      I have a commsec account so i will look into EFT's (I don't really know much about it)

      Do you think I have enough savings to effectively invest in both property and EFT’s? I currently live in the outer suburbs of Melbourne where you can pick up a new 2/3 bedroom town house for around 300k.

      • drprox on 28/05/2014 - 13:13

        a guessing game? :D Melton?

        • Ted Mosby on 28/05/2014 - 13:16

          nope

        • [Deactivated] on 28/05/2014 - 17:18

          Dandy? Hallam? Berwick?

        • Ted Mosby on 28/05/2014 - 17:47

          Nope, think west

        • hahaboy on 29/05/2014 - 18:42

          Sunbury!

      • fox81 on 28/05/2014 - 15:47

        its ETF. Exchange traded fund.

      • p1 ama on 28/05/2014 - 17:32

        ETFs are exchange traded funds, which track a market index such as the ASX200.

        You can invest in both property and ETFs if you want, you have more than enough to be able to afford that.

      • skimp on 29/05/2014 - 11:03

        If you do decide to invest in ETFs I also suggest you have a look at markettiming.com.au. They have shown that trend trading can beat the buy-and-hold strategy, and help take the emotions and anxiety out of when to buy and sell your ETFs.

        • herzy on 01/06/2014 - 13:22

          ^ Be careful with this kind of stuff…

    • fox81 on 28/05/2014 - 15:52
      +1

      Any reason why you're highly advising against the margin loan? I know the OP hasn't really asked for tax effective investment options, but if youre comparing against buying an investment property then it should be seriously considered.

      unlike buying a house where youre typically borrowing 80-90% of the value, the margin loan you can scale to whatever ratio youre comfortable with (within the limits).

      • p1 ama on 28/05/2014 - 17:31

        Two reasons.

        1) Margin loans have very high interest rates, if you want to invest on margin (i.e. take on debt), then you really have to invest in property, because mortgages are where you get good interest rates.

        2) Margin loans are marked-to-market, in case you don't know what this means, essentially, you have to ensure that the value of your portfolio is above the amount of debt you have outstanding. So when the value of your portfolio falls below your debt, you have to post a margin (i.e. pay money into a margin account) in order to show that you can still pay off the debt. Of course, this is not lost money, the money is being used as security, but it is still money that can't be used (i.e. invested elsewhere).

    • gk0r on 29/05/2014 - 14:20
      +1

      That kind of rundown is exactly what a financial advise would go through - except tailored to Ted's needs. Everyone here seems to be biased against financial advice, probably because they've "gone to the bank". While not every financial adviser is top notch 'a guy you want to deal with' such generic predisposition is quite harmful.

      It's like saying all tradies are lazy, over charge and turn up for work late. That might be try in some, even many cases, but certainly not true for all.

      • p1 ama on 29/05/2014 - 17:02
        +2

        No, you misunderstand my point.

        You have to understand that trusting a financial advisor is very much like trusting a salesman at JB HiFi, financial advisors are not advisors, they do not give you advice neutrally, they are paid commission on what investment products they sell you.

        I'm not saying that this is a bad thing, but if you seek financial advice from someone who is paid commission, you should be aware of their affiliations.

        On the other hand, when I wrote my post, I really don't care what OP invests in, I'm just giving him information as best I could. I am not affiliated with any financial company. I do not work for a bank or a managed fund. I don't get money if OP invests in X.

        It's easy to understand really, if you trust the Harvey Norman salesman or a real estate agent, then sure, trust your financial advisor too, but if you don't trust them, then don't trust your financial advisor, for they are salesmen too.

        • dailyjuice on 29/05/2014 - 17:35
          +1

          Thought the rest of your points were spot on, but have to clarify one thing.

          Not sure how long ago your university lecturer pointed out the commission thing, but this was a known problem in the financial sector. In light of this there has been recent regulation introduced.

          Its called FOFA - you can read more about it here: http://www.pwc.com.au/industry/financial-services-regulation…

          *edit: movement of sentence

        • Baysew on 30/05/2014 - 17:13
          +2

          The Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 will overturn much of the reforms, including the requirement of the financial planner to work in the best interests of the client.
          The Age

        • Baysew on 31/05/2014 - 13:45

          Easiest thing to remember is that a Financial Advisor is just a Financial Products Salesman.

          Also "You only work in a shop you know, you can drop the attitude." Thanks AbFab

        • Devils Advocate on 31/05/2014 - 14:02

          Yeah I too thought thought that the rest of your points were pretty spot on. Just have two clarifications to make:

          • Not all financial advisers receive commission. Many are fee for advice. You have to pay for the advice one way for another (no one in any industry works for free), so if they don't charge you an initial fee then you are paying commmission. You can simply ask the advisor upfront whether they are fee-for-advice or whether they receive commission (on any product such as investments and insurances)

          • I'm not sure why you have highly recommended he doesn't consider margin lending. Margin lending is a great way to increase your investing potential. Whilst it isn't for everyone (you have to be an aggressive enough investor) history shows that it can increase returns by very large amount. Especially since OP seems to be on a healthy income I would recommend that he considers it as an option.

    • undercut on 31/05/2014 - 10:38

      Hi paulsterio, can you recommend any particular ETF provider? From Commsec - UBS, iShares, Vanguard Investments, State Street Global Advisors, ETF Securities Ltd, Russell Investments, BetaShares, Market Vectors. Thanks

      • Baysew on 31/05/2014 - 13:36
        +2

        The ETF's that paulsterio mentions are both issued by StateStreet. I have two ETF's - STW same as paulsterio - tracks ASX 200 and Vanguard Australian Shares High Yield - VHY. Been happy with both.

        StateStreet has been around Australia for quite a while and Vanguard invented indexed funds .

        A useful site is ASX to compare performance and MER's. (Management expense ratio)

      • p1 ama on 31/05/2014 - 15:06

        The ETF provider doesn't really matter, Vanguard and SPDR (State Street) have both been around for ages and I'm sure the others are great too.

        What's important is you have to work out what your investment goals are, work out what index you want to track and look for a fund which tracks that index with minimum management fees, though they're all competitive these days.

    • voldemort on 31/05/2014 - 17:34

      I wish there would be more people like you in this community :-) If you don't mind I'm asking, which university did you go to?

  • [Deactivated] on 28/05/2014 - 10:52
    +1

    Ubank definitely - 4.37% risk free and money when you want it!

    Don't bother with a separate home savings account, just dump it all in there and watch it grow until you are ready to buy.

  • fruit on 28/05/2014 - 12:00
    +4

    Bitcoins!

    • johnno07 on 28/05/2014 - 13:10
      +1

      I'm assuming that is a joke, but just in case it's not - please don't invest in Bitcoins, or any cryptocurrency.

      • [Deactivated] on 28/05/2014 - 13:43

        DogeCoin man, you'll be rich!!

        • OzJD on 29/05/2014 - 01:37
          +2

          Much rich, very money!

      • pat_mac on 19/01/2018 - 13:02

        Invested in bitcoins, it'd be over $1.5 million today - even with the recent crash.

        • johnno07 on 19/01/2018 - 13:19

          Classic case of 20/20 hindsight. There are loads of high risk ventures that he could have invested in 4 years ago that would have made a huge return. Similarly there are loads of high risk ventures that would have cleaned out his bank account. I still would not invest all my savings in cryptos.

    • michjfro on 02/06/2014 - 07:40

      Use the Bitcoins to buy an emu farm!

      • scrimshaw on 02/06/2014 - 15:59

        Farmville investments?

  • t_c on 28/05/2014 - 14:03

    Put it all in Google shares and one day you might be a googillion-air

  • adante on 28/05/2014 - 14:08
    +11

    No advice but hats off to OP - good to see someone so young on a decent wicket and not just livin' large.

    • Ted Mosby on 28/05/2014 - 18:00
      +13

      Thanks :)
      I don't always splurge, but when I do - it's on $9 dell printers, 'free' rebel sports gift cards and enelope batteries ;)

  • edgar28 on 28/05/2014 - 16:20
    +5

    How's Robin Scherbatsky by the way? she would suggest you get a house in the city and enjoy the city life.

    • superm86 on 29/05/2014 - 15:21
      +1

      or may be in Canada? ;-p

  • tohara on 28/05/2014 - 17:10
    -1

    Don't go to an adviser they're not worth it and will put you into managed funds where they take a cut and you end up paying a stupid amount of management fees.

    Buy a house and rent it out. Use 50k for the deposit and put the rest in an offset account.

    In 5+ years you will have saved a lot in tax, you will have a positively geared house, you will have decent equity in the house and you'll have an appreciating asset.

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