$30,000 in Savings I Want to Invest

sp3ctr41 on 08/11/2018 - 15:55

Hi!

I am 23 and have full time employment. I am trying to save for property and recently I've found I'm having a hard time holding on to my money (what goes in, goes out)! So I thought I'd lock it all up.

I earn $85,000 a year including Super (before tax).
I have $5,000 in Vanguard Index Australian Shares Fund (have had so for a year).
I have $2,000 in Bitcoin (used to be $18,000…. yea I was young(er) and stupid, lesson learnt).
Finally, I have the aforementioned $30,000 in savings which I keep using to buy unnecessary things.
I have about $800 in cash, consider it an emergency fund. Assume rent is taken care off.

I want to lock that $30,000 away in an investment for the next 1.5-3 years. The plan is to save up to $80,000-$100,000 then pull out of managed funds and move into property investments, probably with my siblings (who are younger and saving up).

Is it a good idea to throw it all into the same Vanguard fund I am currently using? Any help from the experts :P?

Other funds I can invest in, I want to keep it in Vanguard since its easier to manage:
Vanguard Investor Cash Plus Fund
Vanguard Index Diversified Bond Fund
Vanguard Index Australian Property Securities Fund
Vanguard Index Australian Shares Fund
Vanguard High Yield Australian Shares Fund
Vanguard Index International Shares Fund
Vanguard Index Hedged International Shares Fund
Vanguard LifeStrategy® Conservative Fund
Vanguard LifeStrategy® Balanced Fund
Vanguard LifeStrategy® Growth Fund
Vanguard LifeStrategy® High Growth Fund

Financial

Comments

    • HighAndDry on 08/11/2018 - 16:14
      +26

      This level of insecurity is unattractive. OP has some savings and looking for advice on how to invest it. Not everything has to do with you.

        • HighAndDry on 08/11/2018 - 16:43
          +7

          OP is very well set-up and doing well for themselves, but there's nothing about the post that comes off as humble-bragging (or any other kind of bragging).

          • pegaxs on 08/11/2018 - 20:29
            +3

            @HighAndDry: Agreed. Asking for investment advice after a bad bitcoin buy and only having $30k is hardly a humble brag.

            Now, over on the automotive forum, if you want to see humble brags, come and visit…

    • chumlee on 08/11/2018 - 17:33
      +3

      I have a rich Nigerian uncle who is willing to park some of his wealth in your bank account for a $1000 fee.

    • Godric on 08/11/2018 - 17:38
      +2

      If he wanted to make you feel like s#1t he would of said a substantially higher figure than that while ALSO bragging AND boasting at the same time which he evidently is not.

      If you are not able to discipline your self to have any savings, instead of sulking take some tips on how to improve.

      Here: What Is The Best Skill That You Have Learnt to Save Money?

      Or just continue taking out Pay Day loans and work up from your debt.

    • sp3ctr41 on 08/11/2018 - 18:38
      +3

      Thankyou High and Dry.

      bargainhunter, I honestly just wanted the opinion of fellow ozbargainers who perhaps had more experience than I do, especially after losing a large portion of my funds to crypto, which I worked really hard for while studying. To get the best answer I need to provide all information which may be relevant.

      We all have our problems, I for instance didn't get the chance to travel and feel it may be a bit late now as I have things tying me down (work being one of them) and I am only doing okay financially because up until recently, I was very concious about how I spent my money. I still drive a tattered up 90s car for instance. I got into so many hobbies and got a little carried away, hence the post, I need to save money again 😅.

      Sorry I made you feel bad. Perhaps if you posted your situation you may be able to get some advice too.

      • bargainhunter87 on 08/11/2018 - 22:00

        Looks like my comment offended a few people. Was just having a bit of a laugh to myself - nope my financial situation is fine. Thanks for looking out and honestly mate well done on saving that amount at the age you are at. It is truly inspiring. I'm not sure how you would go about investing that amount of money but my only suggestion would be do a risk analysis and choose an option which is not high risk high reward. You can do that later in life but at the moment its about building a stronger foundation. Goodluck and well done mate

        • sp3ctr41 on 08/11/2018 - 23:06

          Thank you. Glad to hear you're doing well yourself!

      • CheapskateQueen on 08/11/2018 - 22:38

        Mate you're 23… "didn't get the chance to travel" …………… uuumm you're 23. Go travel.

        • sp3ctr41 on 08/11/2018 - 23:05

          Sorry. Meant to say I wanted to take a year off and travel. This wouldve been feasible during university or just after school. Wouldve also been a better use of 18k. Difficult now 😅.

  • poboy on 08/11/2018 - 16:21
    +5

    Hey,

    Congrats on the saving. Plus you are on a great wage for your age. I don't have any advice on where to put your money (although your short term looks to be a bit too short for shares/managed funds), but I want to reassure you that the paper loss you took on bitcoin is a money lesson that is best to have when you are young. Taking a hit makes you more vigilant in your future decisions. It may be cliched, but consider that 'loss' to be an investment in your financial future.

    Good luck.

    • sp3ctr41 on 08/11/2018 - 18:41

      Thank you! I do feel like I am less risk averse then before, especially considering that money was alot of my worth, however I just think of it now as a lesson learnt as I said. No point being upset about what happened!

  • npc on 08/11/2018 - 16:24
    +3

    Real question: what are the reasons to believe that property investment is going to be more profitable compared to VAS/VGS? I did a few (simple) calculations and property seems to be a bad investment, especially considering the liquidity and upkeep that is required.

    Edit: in reply to the topic starter - put 30k in VGS.

    • dcep on 08/11/2018 - 18:25
      +2

      it's the boom bust timing

      those who ride the waves in Sydney for the last decades have their wealth times multiple folds

      Real example, 2 bedder apart in Chatswood bought at $630k in 2013, sold for $1m in 2016, without any value added / renovations.

    • sp3ctr41 on 08/11/2018 - 18:44

      Three reasons. I prefer my investment to be a physical asset, rather than a stake in a company. And secondly, I don't intend to buy in Sydney or Melbourne but areas which are likely to experience booms. I'll need to do research and planning but I have a few ideas, I think it'll generate higher returns. Third is I want to get my siblings investing and this is a way we can all benefit.

  • HighAndDry on 08/11/2018 - 16:27
    +2

    The plan is to save up to $80,000-$100,000 then pull out of managed funds and move into property investments

    You'd be looking at a more conservative, low-risk investment as you seem to just want to hold onto the funds (beating inflation) for future use. Really as long as you stay away from "High Yield" or "High Growth" or anything else of that nature, you should be fine. I'd personally also stay away from international investments just because the rest of the world has tended to be (no guarantees as to the future, obviously) a bit more volatile than Australian markets. (Not that the Australian market has been doing spectacularly either, just… more stably, whether up or down).

    • sp3ctr41 on 08/11/2018 - 18:47

      Perhaps this isn't as big an issue as I think. So far I'm leaning towards 10k in the life strategy growth fund, 15k in the fund I already have and the last 5k in the life strategy balanced fund. But considering it's short term, it may not matter too much.

  • ausdday on 08/11/2018 - 16:52
    +2

    Personally, I think you are getting it wrong. First, how long did you take to save up that $30k. How much money can you save up for the next 1.5 - 3 years? Sum those up, and calculate how far away are you from your 80 - 100k target. Then calculate back how much return you need from your current 30k investment in order for you to achieve your goal?

    If it's 1 - 3% return, just throw them into FD.
    If it's 3 - 7% return, you might need to look into dividend shares or ETF
    If it's higher than 7% return, you need to get into high risk investment.

    • HighAndDry on 08/11/2018 - 17:10
      +2

      Nooooo…….. this is the wrong direction to work in. OP doesn't need to invest in property, that's their goal, but to aim for that without regard to the potential risk of the higher yield investments would be ill-advised. IF OP was working backwards, they can use the amount they're aiming for to work out how much they need to save annually.

      • ausdday on 08/11/2018 - 17:30
        +2

        Well, I ain't OP nor his/her parent. I can't say what he/she needs or doesn't need.

        OP is asking he has a goal, and his current position, and asking advise how to achieve that. I am just answering based on that.

        And if anyone have a goal in life, and give up due to risk, he/she will end up HighAndDry (age high, bank account dry). I would risk everything when I am age 23. I will be more careful when I am 32. :)

        • HighAndDry on 08/11/2018 - 17:35
          +3

          I feel OP might already have had their share of high-risk/high-return ventures…

          I have $2,000 in Bitcoin (used to be $18,000….

          • ausdday on 08/11/2018 - 17:50
            +1

            @HighAndDry: I agree. I had expensive lessons in the past as well. Just have to learn from it.

            1. Investing without the knowledge is gambling.
            2. No one has the obligation to help you earn money, not even fund managers. They can lose majority of your money, and still take a cut from the fund as management fees.
            3. Do the homework and sometimes just have to take calculated risk.

            Happy investing … :P

            • sp3ctr41 on 08/11/2018 - 18:57

              @ausdday: Thanks for the insight! I think after gambling alot of my money on crypto I'm a little hesitant to get into anything high risk again for a while. I would rather focus on balance/moderate risk investments in the mean time as I know I can achieve my goals this way, albeit, slower.

  • capslock on 08/11/2018 - 17:37
    +1

    There is nothing wrong with your plan of putting the $30k in a share fund. Nobody knows what the best investment will be in the next 3 years. It might be bitcoin for all we know. Shares are a tried and tested investment and should be ok.

  • RandomNinja on 08/11/2018 - 17:40

    If your window is 1.5-3 year investment, you could look at peer to peer lending like Ratesetter. They're offering ~7% pa return in 3 year loan market which is decent given the relatively low risk.

  • [Deactivated] on 08/11/2018 - 18:20
    -2

    1. Buy land

    2. Grow avocadoes

    3. Profit

  • Mr Ayayay on 08/11/2018 - 21:35

    1. The fees on some of those Vanguard retail managed funds can be very high (0.9% per annum plus a buy sell spread). In 1.5-3 years you could easily lose money. If you buy ETFs then you can get much better annual fees.

    2. Personally I am keeping my deposit in a HISA for liquidity and low risk. If you are unwilling to do this then I'd suggest splitting the amount across a number of different investments e.g. 5k ratesetter, 5k VAS, 5k VGS, 5k AFI etc.

  • Flanders on 08/11/2018 - 23:40

    Maybe just have it locked into back account, long term bank deposit.
    Have the account locked as a 'joint account' where your mother or father, has to sign, as well as you, to actually take money out.
    Investments can be incredibly risky, as you have already learnt. If you don't know what your doing, there is a high chance you could lose big again.
    Since it seems your main problem is you need it 'locked' away so you stop wasting it on stuff you don't need etc, a bank account (long term deposit) where you can only put money in, and not take any out, would solve your main issue IMO.
    Explain to your parent, who you make it a need to cosign for any withdrawals, explain to them what you are struggling with,and what you want to do. Ie. Struggling with wasting dollars on crap, want to save up $100,000 or more for a property investment.

  • Ozbargainite on 09/11/2018 - 00:17

    Cash will be king soon. Wait.

  • Ninja9 on 09/11/2018 - 08:24

    Buy land
    Build earth house
    Grow veggies & fruits, chickens, fishes, etc
    Quit full time employment
    Spend an hr/day farming and 23hrs free time to enjoy life
    Life is easy…

  • ArcticSilver08 on 09/11/2018 - 15:06

    How'd you get to 30k in the first place, how long did it take you?

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