The best ways to invest your money right now
During the pandemic many Australians have been investing their money. These are the best places to park your cash right now.
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Record low interest rates, a rebounding sharemarket and a subdued property market has forced investors to think carefully about where they invest their money.
While many households have hit hard times during the pandemic, it hasn’t stopped investors from putting their money into a particular asset class to watch it grow.
New independent research commissioned by ING quizzed 1000 Australians to find out their attitudes towards investing and found the following:
• 44 per cent see property as the best investment bet.
• 33 per cent say parking cash in the bank is the safest option.
• 24 per cent feel comfortable investing in shares.
Of those who are considering investing in property about one in ten say they have been saving through the pandemic to make it happen.
Kylie Cameron, 30, and husband Andrew, 32, recently purchased their first home – a two-bedroom investment property at Rockdale in Sydney’s south.
They saved a $100,000 deposit before purchasing the $560,000 property.
“While interest rates were low we wanted to purchase an investment property and we’re hoping to purchase another one in the next few years,” Cameron says.
“The idea is to build up equity then eventually buy our own home in the next decade.”
Cameron says it’s their first major investment and she says it was a good starting point to build their wealth.
The research also found about 27 per cent of people feel more confident about their financial knowledge than they did before the pandemic struck.
ING’s head of home loans Julie-Anne Bosich says before investing Australians should make sure they’ve done their homework.
“Before investing make sure you’ve done your research on what you’re investing in and are comfortable with the level of risk you’re taking,” she says.
But she says if it is property investors must have a decent deposit saved up.
“Generally lenders will ask for 10 to 20 per cent deposit for an investment property and if it’s less than 20 per cent you may need to take out lenders mortgage insurance,” Bosich says.
“Record low interest rates, the prospect of a weakened housing market and talk of easing lending restrictions are probably the factors spurring on many to consider property.”
Financial adviser Scott Haywood says “liquidity” is key when investing – that is when the asset can be turned into cash.
“Liquidity in this market is key coming into the uncertainty relating to interest rates and the US election which means money in the bank or shares and low inflation,” he says.
“There’s five places to invest cash, fixed interest, shares, property or your own business which carries an enormous amount of risk.”
Haywood says “diversification” must be very simple and he warned investors to think through their strategy before tipping their money into a particular asset class.
And he also says buying property comes at a higher cost than buying shares.
“The issue with property across Australia is the cost of stamp duty and the transaction costs which can be a big handbrake,” he says.
“Unless you are prepared to pay an enormous amount of mortgage insurance you need to have a least a 10 or 15 per cent deposit so what we say to younger clients is to start with shares as a five to ten year plan.”
INVESTING TIPS
• Pay off your any high interest debts first.
• Have a savings buffer of at least three months of living expenses.
• Pen out an investment plan.
• Understand the different asset classes.
• Diversify where you put your money.
• Keep track of your investments.
• Seek professional advice if you need it.