Money Australia — May 2017

3.EMERGENCY

FUNDP38

2.REGULAR

INCOME P36

COVER STORY

So you have

$200aweek

to invest but

where should

youputit?The

best place can

vary depending

on your end

goal.Weget

the experts to

put together

portfolios

aimed at

helping you

achieve a

different

financial aim.

1.HOME

DEPOSIT P34

5.RETIREMENT
WEALTH P42

4.KID’S

EDUCATIONP40

S

avingforahomeislikelytobethebiggest

financialoutlayyouwillmakeforone

single item. According to CoreLogic, the

average house in Sydney, for example, has

increasedinvaluefrom$650,000in2012

toover$1,066,000in2017–a64%riseinfiveyears.

Putting aside the affordability and housing bubble

debate,togetonthepropertyladderyouhavetosaveup

adepositofbetween10%and20%ofthepropertyvalue.

Investing in a balanced low-fee portfolio of exchange

tradedfunds(ETFs)isonesmartwaytomaximise

yoursavingsandgetyouclosertoyourpropertygoal.

There’salottoconsiderbeforeyoubuyahome.First,

is it right for you or are you suffering FOMO (fear of

missing out) just because everyone else is doing it?

If buying is definitely right for you, consider the

practicalities. Where do you want to live and where

can you afford to live? Can you cover the repair and

insurance costs? When interest rates go up (and they

will) can you service your mortgage?

INVEST EARLY AND REGULARLY

Startinvestingearlyandregularly.Investingjust$200

aweekmightnotsoundlikeabigamountbutitwill

make a real difference in the long-term.

Investingearlymeansyoucantakeadvantageof

compound returns, which is simply earning additional

returnsonprofitsthatarere-invested.Settingaside

a small amount on a regular basis can help you reach

your goal faster.

Assuming growth of 7% a year, the initial $200 invest-

mentwithweeklytop-upsof$200wouldendupbeing

around $60,000 after five years with compounding. If

aftertwoyearsofinvestingyouincreaseyourweekly

investmentto$300,youcouldgetcloserto$80,000.

DIVERSIFICATION IS KEY

Oneofthebestwaystomaximiseyourinvestment

returnsoverthelongrunistoinvestinabroadmix

of investments for diversification and keep your fees

low. ETFs give investors access to both broad diversi-

1. HOME

DEPOSIT

WHERE

TO INVEST

$200PW

OVER

5 YEARS

STORY

CHRIS

BRYCKI