Save or Invest?

Lfuanin on 08/07/2022 - 19:42
Last edited 08/07/2022 - 19:42

Hey OzBargainers!

With all the recent inflation & rates going up, stocks doing poorly, I was wondering what would be the best option: to save or to invest? Thoughts?

I currently just have some extra cash stacked in savings accounts:
225k in Westpac @ 1.35%
and
29.9k in Westpac @ 2.5%
Offset account balance is currently equal to remaining home loan, so no loan interest to worry about either.

and in terms of investments:
226k (of which 67k is profit as of today) in ASX across ~10ish shares, mostly travel (FLT etc.) and medical
2.6k in pocket EFTs (ETHI/IOZ/NDQ/SYI) - yeah, barely nothing tbh
One apartment which isn't returning much currently, was rented at low price when market was down last year
One owner-occupied house (thinking of selling & switching maybe within 2-4 years?)

So, my question is, what should I do with the cash I have in savings? Reluctant to put more into stocks atm with how markets are looking, and I don't have enough to invest in another property, apartments have been pretty awful for me too as OC fees keep increasing and interest is so high (and shit quality always requiring repairs, crappy management too).

Should I invest in something (if so, thoughts?) or just keep it in savings? Inflation has been pretty high though.

If savings:
What are some reliable banks that offer higher interest? Westpac's 1.35% isn't very competitive atm. I looked into BOQ at 3% but they seem to have terrible reviews, lots of horror stories of getting accounts locked as suspicious and waiting days when transferring money out etc. Citibank at 2.1% I believe, but also has pretty low reviews from what I've read.

How are everyone's experiences with UBank (2.35%) and ING (2.1%)?

Cheers guys

Edit: Melbourne based. Typo fixes & formatting.

Financial

Comments

  • prisonmike on 08/07/2022 - 19:54
    +21

    Ohh wow with all that dough you are seeking free advice.

  • mskeggs on 08/07/2022 - 19:58
    +1

    How did you get your savings? Is there a way to do more of that with your money?

    • fuanin on 08/07/2022 - 19:59

      Sold an apartment recently, so no, not really.

      • duchy on 08/07/2022 - 21:53
        +1

        Sell one more! The one that's a dud investment.

        If you're like me, the apartment market will boom two days after settlement.

  • KangaDrew on 08/07/2022 - 19:59
    +12

    Member since 2019.
    No comments.
    First post.
    Has ~$480K and asking for financial advice (seems legit).

    Weird flex, but OK.

  • fuanin on 08/07/2022 - 20:02
    +6

    Okay, not a flex. So for more insight it is actually my parents money (& savings etc.), but I'm managing it, all accounts and investments etc. They're both 65+ so basically their whole life savings and net worth. Does that make it any better?

    Edit: I'm managing because of a few reasons: English isn't their first-language, they barely speak it, and can't use technology to save their lives (my parents still leave calls on for hours because they forget or 'think' they've already pressed hang up on their phone). If it makes any of you thinking I'm thinking to flex feel better, my parents ran a family restaurant for 40+ years to make all this, sometimes working 5-6am - 12am lol. Dad developed wrist issues due to the cooking & now he can't even use his arm properly (some kind of bone and joint overgrowth from friction? painful to grip/use strength).

    • Diverse on 08/07/2022 - 20:06

      OzB things, everyone here earns >$500k a year but throws a tantrum when they find out others have money too.

    • KangaDrew on 08/07/2022 - 20:07

      Those first two sentences nailed it :-)

      I currently just have some extra cash stacked in savings accounts:

      followed casually by

      225k in Westpac @ 1.35%
      and
      29.9k in Westpac @ 2.5%

      seemed a bit off the cuff but thanks for the extra clarification. Your parents are lucky to have someone who wants to ensure they are looked after going into retirement.

      • fuanin on 08/07/2022 - 20:10
        +5

        Thank you. I didn't want to explain all that at first as I thought it might've been tmi lol.

    • whatwasherproblem on 08/07/2022 - 21:50
      +1

      I'm managing it, all accounts and investments etc. They're both 65+

      Ah, that makes more sense. I was actually going to chimp out about your "The stock market is doing so poorly!" remark and how you apparently think that means that investing in stocks when they're on fire sale like they are now is somehow a bad idea. But if you've got shorter time horizons (e.g. because your parents are at retirement age and you need most of that money to retain value and be easily liquidated at a moment's notice) then it makes sense that you probably don't want to be weathering market dips.

      • fuanin on 08/07/2022 - 22:30

        Yep, that's pretty much the reason, I don't want to take a risk with their money as we mostly likely won't be holding onto the stocks long term in case they need it for emergencies etc., so probably not the best idea at the moment. Would be a decent investment long term though with current low prices.

  • Some Human on 08/07/2022 - 20:53
    +1

    Sell apartment + use bank money to buy a free standing house?

  • abctoz on 08/07/2022 - 21:12
    +1

    if you want to save long term go negotiate a term deposit with bank, they give you better rates with larger amounts

  • screensaver on 08/07/2022 - 21:42

    the good news is that interest rates are higher and will apparently go higher. just remember some of these have honeymoon rates of 4 months and some have a limit , so now you can do both, save and invest

  • ALesha77 on 08/07/2022 - 22:10

    My NOT financial advice:
    1. Seek professional help in managing money (Vanguard, Blackrock - vanilla options and if you can educate yourself a bit - go with a hedge fund but you need to chose well)
    2. Re-allocate from Travel (cyclical and usually with some big debt) - re-opening has been done and the earnings will be squeezed
    3. If you want to continue managing money - there is a lot to learn but this forum is not a place to start

    BTW, well done with timing the property market - your savvy or parents'?

    • fuanin on 08/07/2022 - 22:23

      Thank you! Parents made the decision but mainly because returns weren't looking good last year and OC was terrible, sold earlier this year so I guess we got lucky.

      1 - I have an upcoming appointment with commonwealth bank's financial advisors, not sure if they're any good but I will check out the ones you mentioned!
      2 - Will definitely look into this.
      3 - I have been looking up some information actually, just figured maybe I could get more experience based thoughts here esp. in regards to bank accounts and such (in terms of experience with customer service, ease of use etc.) cause all reviews I see are basically 1.5/5 which would put me away every single bank lol.

      • ALesha77 on 09/07/2022 - 11:14

        I think you have misunderstood what I said.

        Reading your post I understand that you have little knowledge about markets (no offence) and got lucky in the raging bull market (as we all did). But don't confuse luck with brains.

        With that, I suggested to give the money to professional money managers with reputation and fiduciary duty.
        Financial advisors is a different breed - I assume there might be good ones but generally these people don't understand cycles, markets or macro. Sure, go listen to what they have to say but then give your money to those whose job is to asset allocate not advise.

    • SlartiBartFozz on 09/07/2022 - 13:23

      My understanding is hedge / managed funds give higher returns but sucks a lot back in high fees, and index funds are better overall. Any thoughts on that?

      • ALesha77 on 10/07/2022 - 23:08

        You cannot compare a proper hedgefund to an index fund. Former should target absolute return while latter just give you an exposure to a particular industry / style factor / etc. In short, with an index fund you need to be your own money manager.
        Easy days of investing into SPY or QQQ are gone (for now)

        Yes - regarding fees. Standard hedgefunds' rate is 2/20, while index fund will cost you a few basis points.

  • mmd on 09/07/2022 - 00:02
    +2

    this is an interesting post.
    AFAIK i thought avoid financial advisors as they have hidden agendas esp comm bank!
    You might be better off posting in reddit under ausfinance?

    • ALesha77 on 09/07/2022 - 11:20

      You might be better off posting in reddit under ausfinance?

      This is a road to ruin.

      I never suggested to use financial advisors. You need to have a better understanding of the difference between advising what do with client's money and managing client's money.

      Every money manager have their own agendas like targeting AUM, window dressing, averaging fund target performance but all in all, even with all that baggage their performance will be better than the reddit crowd.

  • screensaver on 09/07/2022 - 13:40

    take the 3% and run

  • Terbo on 09/07/2022 - 14:36

    Cash = rainy day, income buffer, opportunity ready, its not an investment. But AMM is offering 3 - 4% on 6 -12 mth TDs to park your money thru an adviser, or get more fancy with Bank notes now being issued, floating and better return but more risk than cash.
    Property = its somewhere to live, as an investment its the land, scarcity and attractiveness to someone who wants to live there/buy from you that will see you make a capital gain, but timing is hard so buy right and wait, its a terrible income return for the work and risk so you need to get the cap gain right
    Shares = investing in businesses that we work for, buy from and rely on in some form. Ideally you buy a share of profitable business and receive regular profit (dividends), if the business is any good the value in it will go up over time, trying to pick 'winners' is speculation not investing, more volatile in short term than property, but more consistent in the medium/long term, with more flexibility and less hassle, not as easy to leverage though. Most people should have most of their long term Super in this area.
    As for CBA financial advisers, didnt think there were any left, 28K > 16K advisers in the past few years. Like their loans people, they ultimately work for the bank, not for you, consider talking to someone else as well that may have a broader outlook and less restriction.
    You have $500K+ in investments plus income, if you pay someone 5 - 10K for good education, strategy, planning and support for 12 mths, you should make the money back straight away, and for years afterwards too.

  • lamparnon77 on 22/07/2022 - 00:54

    I've only had great experiences with ING personally

  • Vote for Pedro on 22/07/2022 - 21:32

    Look at those guns. If you flex any harder they’ll pop.

    Don’t, just don’t offer to tell anyone the time

  • mrvaluepack on 22/07/2022 - 21:54

    My advice as of today is keep in high interest variable rate cash account or offset account.

    I know that it might sound counter intuitive because of inflation but short term cash bonds is actually one of the best performers during rising inflation and bank rates. The other alternative during this environment is value stocks.

    This guy is my go to guy for free financial advise, unbiased and full of citations and references from academic studies.
    https://www.youtube.com/watch?v=1a3XnvRCcVo

    • mrtin on 23/07/2022 - 22:56

      What do you mean by short term cash bonds are one of the best performers during rising I lfation and bank rates?

      • mrvaluepack on 24/07/2022 - 13:11

        High interest variable rate savings account has shown to be one of the best.

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