I am 25 years old and have 230k saved all of which is in savings account earning 5 percent interest. I make about 100k a year. I have very low expenses and save majority of the money I make. I have started putting my recent pay checks into the stock market purchasing shares of IVV, VAS and VGS. Should I continue with this strategy or should I put majority of my savings into the stock market and keep a small emergency fund in cash. Was also looking at the idea of purchasing an investment property in Wodonga VIC? I own no property or other assets
What to Do with Savings
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Careful with comments like this. Without financial stability, “make it work” can lead to reckless choices like gambling or Buy Now Pay Later schemes. This mindset suits those with surplus, not struggle.
Imagine Bob hears this at work, and decides to 'make it work' at the Pokies, or Sarah reads this and signs up to a Latitude deal in order to go on that trip she's always dreamed of, despite being broke. YMMV.
Hasnt OP noticed that interest rates have already dropped by 0.5%
OP is probably only getting 4.5% and that will be much less by end of the year.I suggest OP and everyone places a reasonable amount of money into a Gold ETF such as Global X GOLD (GOLD) or Perth Mint Gold (PMGOLD) via any shares trading platform.
Gold is currently in a sideways consolidation phase after going up 40% in 12 months.
So ideal time to buy in before it takes off again.
The beauty of this is any profits fall under CGT when held for over 12 months.
So you only pay HALF THE TAX compared with earning interest and the profits are potentailly MUCH HIGHER!
Nah best to invest in bitcoin. gotta ride that train to the mooooo00000n
I wouldnt say "best".
I am also watching bitcoin but the ride can be very hairy.
And its going nowhere right now, just like Gold.
Yes it too has has a big move up over the last 12 months.
I will consider Bitcoin after its had a big pullback - which its due to have before its next big move up.Better to say put SOME cash into Bitcoin as well as Gold.
Just be aware of the wild swings that Bitcoin can take.
Stomach it or leave it.Just remember that Bitcoin is not backed by anything other than "pure faith" and is entirely "speculative"
Gold ETFs are backed by Physical Gold.
Gold has been a store of wealth for 000s of years
@Dr Phil: Yep, dumb decision to buy Bitcoin at it's all time high. It'll crash like it always does, buy it after it crashes 50%+. Last cycle it went from $88k down to $25k, the previous cycle before that it went from $25k down to $5k.
What you talking about? It is working at 5%. If it was all just sitting in a transaction account earning 0% or in cash under his bed, then it would be dead money.
After tax that's 3.4% so not even keeping up with inflation over the past few years. Higher growth and holding for more than 12 months to reduce CGT would improve the outcome.
Given your tender age if 25yr, i would go all in etf.
Theres not much point keepoing an emergency fund when etfs are so liquid can you can sell and get cash almost immediately.
If u cant buy property now, id put savings all in etf and let it rip. 3.5 years more of trump. Ride the wave
Not so liquid for the first 12m if OP desires the 50% CGT discount
yes understand, but if its an "emergency", then its an "emergency" eh?
If he's profited enough to worry about the CGT discount in less than 12 months, is it really a concern vs cash in the bank?
He should buy a house, either an investment property or a principal place of residence, paying rent is a bad idea. You should always have one house to be insulated against the insane house & rent prices. Everyone knows that housing is leaving incomes in the dust, the longer you wait the worse it'll be for you.
Yea 100% agreed .. the leverage and compound growth will do wonders at such a young age
Pay cheques.
My advise is if you are still living with parents stay there till they kick you out. But stay in their good books. That way you also won't need an emergency fund. If you are not living with Mom and Pop, and they reside in Straya, move back in.
Also you could do some extra stuff around the house for an extra allowance to come out of any peppercorn rental agreement.Hang on!
Do you really get paid by cheque?EDIT Sure are a lot of flushed single 25-30 YO males ,living at home, around here lately.
Not paid by cheques, just an expression
Gotcha.(another expression)
EDIT Sure are a lot of flushed single 25-30 YO males ,living at home, around here lately.
This isn't a new phenomenon.
Maybe you're just noticing more?
Two-thirds of singles in their 20s now live with their parents (2019 article)
You too?!
mum
Why Wodonga, do you live there?
close to jv?
I don't live there but I have a friend who owns an investment property there. I would be open to buying in other areas, but tbh I am leaning towards shares.
Buying a house to live in, good idea.
Many people love IPs because it’s tangible but IPs are a lot of work and not the good kind of work. Even with the best tenants, things can go wrong, accidents happen and charges pile up. Index ETFs are the best (least effort) way to earn passive income long term.
Why not buy something that you might actually want to live in someday. Establish it as your PPOR for tax purposes. Property isn't exactly a passive investment, remote ones would a pain in the ass and expensive as you'll have to pay someone to do all the work.
Wodonga has a pretty strong army presence so plenty of personal renting there. From what I here they offer pretty good returns and the tenants take care of the properties. Not sure how the process works but worth looking into. Plenty of houses renting on killara just outside of wodonga near the army baracks. Houses are affordable to.
If you truly want to provide an investment property to military, you can invest directly with them. Returns are pretty good. I have 2 properties that I lease directly to DHA and the returns are solid.
Found part of the reason for the housing crisis.
Over 1000 empty properties!!!
Ffs! Download sportsbet now and have your own Manager!
Buy your property without loan/mortgage, this is a must. Again, buy it with $0 loan.
Why?
You can bargain hard if the sellers are desperate to secure a sale. You'd be surprised at the amount of property sales that fall through due to finance. The hard part is finding a property you actually want where the sellers are desperate. You'll have to drag it out of the agent, see if their eyes light up when you mention unconditional on finance and short settlement.
How?
Work your ass off for many years and save money every way you can. Ride your pushbike everywhere, don't run the heater, cook all meals at home. There's plenty of advice on the net for this sort of thing.
"cook all meals at home."
cook all meals at public park bbq
.Run the numbers on not running the heater. You won't save that much very fast. And it will have a negative impact on your mental and physical wellbeing. Set it to 18 C not 25 C to save some coin. But if the difference between you buying a house and not buying a house is not running a heater vs running a heater, you might want to expand your thinking about what other expenses you can reduce and/or focus on increasing income.
@tenpercent: With my last power bill having a supply charge which was double the consumption value I wonder when Mr Bowen's cheaper electricity is ever going to happen 🤥
@Ade99: I think the politician was doing what politicians on both sides of the aisle do… lie.
But that doesn't really have anything to do with what I said. Only way to save on the supply charge is to disconnect your electricity entirely, not turn the heater off.
@tenpercent: If you want to pay cash for a house you have to pull out all the stops. Every little thing you do to save money helps.
it will have a negative impact on your mental and physical wellbeing
It will make you stronger and help prepare you for the ride to work the next day, where it's a frosty 3°C. Heating is for the weak.
cook all meals at home.
Where else do you cook them lol
Live at home, gifted free money, found it in a bag, sold weed in his teens.
It's none of our business how OP made their money (or even if they're making this up).
That's a bit prudish.
The OP is under no obligation to answer the question, but @sumyungguy is allowed to ask.
There wouldn't be very much conversation anywhere about very much at all if every allowable question must be 'our business'.
@tenpercent: Thanks for your support… but I think @eddyah got a bit lost in the comments; my question was essentially "how does one buy a property without borrowing?"
This is terrible advice do NOT do this
I see this type of question in a lot of different forum.
I don't have any financial answers for you.
I still struggle with this but it is getting better.
The question is what do you ultimately want? and try to answer as specific as you can. It is ok if you don't know what you want yet.
In the meantime get as educated as you can about the different financial instruments (shares, property, crypto), the pro and cons and whether they can align with your goals.
This is much more sensible advice than some of the other comments in this thread.
Start with, would you accept the risk of your savings falling by half for a chance to go up by half?
Assess your own needs and personality.
For example, some people are the safe type and that's ok. The bank is the safest bet to put your money and earn interest.
But then you can get riskier in the sense of getting an investment property and using it to yield passive income but at what cost? Fees, insurances, REAs, if you have good tenants, prepare for repairs etc…..
Then there's bluechip stocks, cypto…. bet all on black?
ill happily take it.
230k savings at 25yrs ??? How long have you been working f/t ?
See a financial adviser not oz bargainMaybe $10 savings and the rest a lucky double zero bet at Star 🤔
That's old school thinking, this is crypto timing the market to take advantage of the most suckers!
Haha, brand new profile - I think you'll find most people on the internet are full of shit
It's actually an richer dog, one of Zuckerburgs dogs!!!
It bothers me that I spent over 2 decades achieving a salary close to $100k, including multiple post-grad degrees and decades of grinding away at the office, all while living in crappy share houses or paying exhorbitant rent (living at home was never an option). And by then, decent houses were already priced over $1 million.
Then I hear about 25-year-old recent graduates straight into $100k jobs while living at home, investing in the share market, and thinking about purchasing investment properties.
You hit the nail on the head with not being able to live at home. That's how most these people are achieving saving. Though good on them for sacrificing and not just blowing it all on Uber eats, holidays and lifestyle. If I see someone who saves, sacrifices and makes the best of a situation then pats on the back to them. I've grinded working in it for myself for 20 years and am close to paying off a second home on much less than 100 k a year with two kids. It can be done, but you gotta make sacrifices. I'll be debt free in 2 years and can then make some choices to enjoy life a little
Though good on them for sacrificing and not just blowing it all on Uber eats, holidays and lifestyle.
On the other hand, if everybody just saved and nobody spent any money, the economy would collapse, unemployment would skyrocket, and we'd all be worse off.
what you say is true but its not really what they mean. im 41 now and in the years since i was a kid ive seen things become so much more consumerist. we dont need to be eating take away or uber eating all the time, we dont need to have take away coffee when you can make one at home or work, we dont need all the neflix type subscriptions, we dont need the latest $2000 iphone when a $500 android is enough. we spend so much on what we want these days rather than what we need. we did the hard savings and paid off our house while all our friends are still paying theirs off and some are renting still.
@kalithreaver: Not sure what you're getting at. Yes, it's financially wise for an individual to live frugally and save rather than spend. But if everyone did that, the economy would tank, and everyone, including you, would feel the pain.
Spending on things like eating out, Uber Eats, and cafe coffees supports the local economy. It keeps small businesses afloat and provides jobs, especially for people who struggle to land full-time, permanent roles in established companies/institutions.
@ForkSnorter: Businesses survived prior to the likes of such easy access to home delivery for take out. The likes of uber eats, etc has made it so easy for people to just order food regardless of whether they need it or not. I can count the number of times ive used these services on one hand since they became so popular during covid. And those times were only when i had a deal to use. Prefer to just go and pickup my food or just cook at home. People spend just for the sake of spending. Just look at black friday and christmas figures. We spend billions on stuff that will probably just get thrown out in 12 months. As someone else said, i see so many people with 2k iphones that clearly cant afford them yet they feel the need to have them. Just like having multiple subscription services.
We spend billions on stuff that will probably just get thrown out in 12 months.
You're right about the horrible wastefulness of our hyper-consumerist plastic-product capitalism.
However, I think you're got the wrong perspective on things like Uber eats, cafe coffee and subscriptions.
Personally I have not once used uber eats, and probably buy take away food for dinner once every 5 years.
However, I still think these things are good for the economy, and even potentially good for the planet, especially if they tap their potential.
Think about it.
Which is more efficient, less wasteful and better for the environment:
One van on the road delivering hot meals to 100 people?
Or 100 cars on the road burning petrol, grinding rubber on the way to pick up their food?
Which is more efficient, less wasteful and better for the environment:
One super-fast, super-efficient commercial kitchen cooking meals for 200 people?
Or 200 people burning their gas cooktops or ovens at home for an hour to cook a meal?
Don't forget the commercial kitchen/restaurant can buy food in bulk so there's less packaging to throw away.
Restaurants, cafes, uber eats, etc. These can give people jobs while potentially also making our society more efficient and less wasteful.
There are some aspects of our current capitalism that are bordering on evil, like the endless consumption of unnecessary plastic goods, which get thrown away.
But there are some highly efficient new ways of getting things done which can save us energy, time, materials, etc.
The same with subscriptions. Don't forget we used to watch most of our movies and TV shows on video tapes, CDs and DVDs, which end up in the sea or in landfill, whereas now it's more centralized, a few hubs sending entertainment to millions of people via light and radio waves.
You also have cheap and almost instant access to monumentally higher quality content and information than people 30 years ago did.
If the market centred on frugality rather than excess then the primary grounds for competition would just shift to lowest unit cost.
Capitalism doesn't go away because you're stingy.
If the market centred on frugality
In 1929, people panicked and became frugal.
Companies couldn’t sell goods → massive layoffs.
Unemployment in the U.S. hit 25%.
GDP shrank by nearly 30%.
Thousands of banks failed.
People starved.
It took a decade and a world war to kickstart the world economy again.
In 2008, house price collapse and defaults resulted in widespread panic and frugality
Demand collapsed.
Unemployment spiked.
Businesses downsized or failed.
50-year-olds moved into their parents' garages.
Governments had to step in with bailouts and stimulus packages just to stop the bleeding.
When everyone tries to save at once, the economy shrinks, incomes fall, and nobody ends up saving anything.
The Japanese people have been saving en masse for decades, and it has gotten them nowhere. They've barely had any economic growth in 30 years, house ownership is low, unstable employment is common, and incomes are now half typical Australian incomes, while the Japanese government has the biggest debt in the world, nobody is having kids, and the country has been talking about the price of rice for the last 6 months.
Not suggesting everyone has to. We are talking about people who want to own a home. Ultimately you cant have your cake and eat it. People still have to buy the basics of life so its not like the economy is going to stop. People slowing down spending has other benefits like slow down on inflation also. Many have become so used to the ease of spending money that its become 2nd nature and the idea of having to make some sacrifices here and there to achieve a goal seems like to much hard work. Each to their own in the end. We have done what we saw as right and important and hopefully our hard work allows our kids a slightly better life when we are gone.
You've gone above and beyond if you're going to be debt free from paying off a second home in 2 years time! Good on you, however that's a much tougher life than most people are willing to deal with. Paying off your own home is enough for most people, there are heaps of lazy people that can't even be stuffed doing that, they'd rather blow their entire pay check on the latest new car and international holidays whilst paying rent forever. No excuses, we recently had a situation at work where someone was 60 and managed to purchase their first house only because they saw a mortgage broker, otherwise they would have just kept living their life assuming that housing was unaffordable for them.
I'm no longer phased by these numbers after saving that much at a similar age/amount and buying a crappy rundown apartment in sydney. I definitely saved up much faster after moving in with a partner and paying much less rent.
Something to keep in mind is that grad salaries have inflated a lot. You'd generally expect something ~70-80k for a grad position that involves specialized skills in 2025.
100k is quickly becoming a junior-mid level of pay.Yeah agreed, our grads start at $90k for 1 year and then the entry salary after that is $115k/year. It's a very normal income these days which is why the average full time salary is over $100k/year now. Even a public school teacher graduate is on $90k/year.
Was shocked and had to do some internal reflection finding out my sisters 1st year teacher salary was $85K. I've been lazy the last 5 years (partly due to COVID) and have fallen way behind by not switching companies/jobs leading my salary to stagnate and fall behind the market. Currently in market for a new role with market rates being about 35% higher than what I'm currently on.
If this is NSW then yeh there's been an internal push to attract more teaching grads. There's been a lot of cuts elsewhere to fund this.
Definitely not the normal rate of pay progression in other industries.
You got laid though, by living out of home. Swings and roundabouts.
Comparison is the thief of joy, there's always gonna be someone in a better or worse position than you are….
You haven't given enough info but look into investment bonds. They might be an option for you.
Also, get some proper investment advice from an adviser.
ETFs until you can buy property. Even if you don't intend to move out yet you can use the 6 year PPOR rule to not pay capital gains even if you rent it out, and you receive the benefit of negative gearing while it's being rented out. You want a PPOR in Australia- the amount of incentives we offer owners far outweigh any other asset.
Are ETFs worth it if your thinking of buying within the next 6 months?
If you already have enough for a deposit in the budget range you want then I would suggest keeping it in high savings and investing your time in looking for a property. The transaction cost (both time and money) for property is very high so you want to try and get it right the first time. Once you've found one, you want to have the cash to pounce immediately.
Are you sure about that? I think you need to have lived in the house before it can become PPOR.
Yes, but there's no legal definition how long and what evidence you need to provide to prove it's lived in. Also, for a first home buyer you get the financial incentive to offset the lost rental.
Sure, but it's at ATO's discretion and OP could be stuck with a big CGT bill if they can't prove that they lived in it before renting it out.
@SlickMick: You've got a big CGT bill with any other asset. Albanese just blatantly did it with his $4.3m Central Coast home. Australia heavily incentisizes buying and protecting the value of PPORs. It's a no-brainer strategy.
@star-ggg: I agree. PPOR is one of the best investments available in Australia, though it only holds wealth rather than distributing it.
Super is even better once retired, as you can get an income from it, but you have to plan ahead. (So many people get to retirement then regret not having contributed more.)
With my super concessional contributions maxed out, if I had spare cash I'd put it into upgrading PPOR. I don't see any other investment coming close.
I wouldn't buy and investment property and try to avoid CGT on it though. We've twice rented out our PPOR whilst working remotely, but it was legit our PPOR first.
Bank
Secure capital, known return
Shares
Long term likely earn (capital gain) more than bank
Much higher risk than bankProperty
Long term likely earn more than bank
Higher risk than bank
Requires management, maintenance and repairs
Readily geared (mortgage) to increase returns (& losses)If you're trying to reduce income by negative gearing, I'd do the long-term maths. How long before rent > expenses, and did the tax savings exceed the CGT.
The better investments are PPOR and super. Get an offset account - that's your emergency funds. Getting the PPOR paid off and concessional super contributions are the best investments you can make.
I think that an investment property whilst living at home is definitely smarter, however that's a short term thing. For a 25 year old male, your goal is to find a partner in the next 5 years and your options become limited when you are still living at home with mummy and daddy. Getting a principle place of residence gives you the edge, independence and reassurance of safety from rising rents & mortgage prices.
You started with an investment property is definitely smarter (which I don't agree with), then end with the advantages of a PPOR (which I do agree with).
I'll remain neutral on the part about finding a partner. I admit it took me to 26 without a PPOR.
Put aside 3-6 months of expenses in an emergency fund and then put the rest into a low cost, whole market ETF like VGS and continue to add to it.
You're in a tremendous financial position and if you kept that up you will be loaded in your later years.
Get an IP
Get specific advice about the suitability of using your own cash to continue to buy shares. There might be better strategies out there.
If you intend to purchase a home you should maximise the value of the first home super saver scheme, being $15k per annum up to $50k. This requires contributions over multiple years but is a tidy instant return on avoided tax and then you get the compounding returns of a high-quality and low fee managed investment product, presuming you're in a good fund.
https://www.ato.gov.au/individuals-and-families/super-for-in…
Re Wodonga, you are probably better off buying in Albury and save on VIC land tax.
I would probably do an investment with 20% deposit and continue with ETFs.
Regardless of which way you go, I highly recommend making goals based investment.
250K is the limit for what banks will insure (per bank account).
Splitting in half to 2x high savings bank accounts is your first step.2nd step is to have a deep think about your goals and future - what is going to happen for you in 5 years, 10 years etc and potentially work towards that…
Do you want a house… a family… retire early without a house and family? - what is important to you…? - OZB cannot answer that for you.3rd step is to possibly pay for professional financial advice based on step 2 and depending on what you want.
@alexdagr8 $250k per account holder per ADI.
You'd need to split your cash over a second bank, not a second account within a bank.+1 NanoDuke - 100%
You heard it here first - dont trust 100% what people on the internet say. Do your own research afterwards.
Buy the property. You won't regret.
Quit your job and become a full-time streamer.
OF !!!!
Buy Bitcoin
Buy a Tekla. They are $100k
easy! it's very Captain Obvious but see a financial planner with that amount of coin! you're probably paying a bit tax too that needs a strategy for too. good luck!
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Money in the bank is dead money. Make it work.