Portability

At any time, you can terminate the fee arrangement with us and manage the securities yourself. You will have no capital gains tax (CGT) events triggered if you wish to transfer the listed securities held within your PMA to another broking account to self-manage (transfer fees may apply). 

Diversification

You can invest in model portfolios of listed securities covering a range of asset classes such as Australian equities, international equities, listed property and fixed income, combining investment expertise with complete administration of your portfolio including ongoing rebalancing and full tax reporting. 

Capped Investment Fees and low brokerage

Our investment management fees start at just $99 p.a. and capped at $451 p.a. for total investments over $82,000*. You can also benefit from low brokerage costs of $5.50 or 0.11% (whichever is greater on any buys or sells). Whether you’re investing $100,000 or $10M, you will never pay InvestSMART more than $451 p.a.* across our entire range of capped fee portfolios.

See the range of InvestSMART's diversified capped-fee portfolios here.

A lot has been written about how difficult it can be for young people to invest in property – we won’t mention smashed avo if you won’t. As well as needing a sizeable deposit up front to apply for a home loan, you need to demonstrate you can comfortably afford your mortgage repayments, because once your application gets approved, you’ll have a massive debt to manage for the next 30 years or so.

But if you can get past the first hurdle (for example, getting your parents to sign as a guarantor for your loan in lieu of a deposit), there are two ways you can make money from a property investment:

1. Earn income as a landlord by renting the place out
2. Wait for the property to increase in value, and sell it at a profit

While some investors “flip” properties by buying them, renovating them, then selling them quickly, property is more often treated as a longer-term investment, to earn money in rental yield and/or capital growth over time.

It’s important to remember that there are no guarantees in property investment (or in any other type of investment, for that matter). A property located in a growing suburb could significantly increase in value over a relatively short time, though some investors find themselves stuck if they can’t attract tenants and the value of their property falls.   

You can compare home loans at RateCity and look for first home buyer loans or investment mortgages that suit your budget, or you can compare the mortgage offers available from specific lenders, such as UBank or Bank Australia.

Minimum investment:

Applying for a home loan requires saving a deposit. While most lenders prefer a deposit of at least 20% of the property’s value, you can still apply for home loans with a deposit as low as 5%. Keep in mind that deposits of less than 20% also require paying for Lenders Mortgage Insurance (LMI), which can be expensive. 

One possible alternative to saving a deposit up-front is to have a guarantor (usually a parent or other close relative) secure the deposit with equity in their own property. However, this could put their own finances at risk if you default on your mortgage repayments. 

Another potential lower-cost option to invest in property is using a service such as BrickX to purchase fractions (or “bricks”) of an investment property, and receive a corresponding fraction of the property’s rental income and/or capital growth if you choose to later sell. You may also be able to consider rent to own options such as OwnHome, though it’s important to check the fine print and get financial and legal advice first. 

What is the main reason you are investing?

What options are available for short-term investors?

Related article: How to buy and invest in Gold in Australia

Why would you consider investing in the short-term?

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Fixed income e.g. bonds

Fixed income assets, such as government and corporate bonds are often seen as providing a relatively stable and reliable return. When purchasing a government bond, you are essentially lending money to the government which they will pay you back with interest. This interest is paid to you in regular instalments throughout the length of the bond.

In the aforementioned Vanguard Index report, Australian bonds averaged 5.02% in gross returns per annum over 10 years. Although, fixed income assets could be considered boring by some investors, having them as part of your investment portfolio can help to offset any losses you may have had from the share market – hence their classification as a ‘defensive’ asset.

Related Article: 4 Ways to Buy Investment Bonds

 Cash e.g. savings accounts

Cash assets, such as savings accounts and term deposits, are the most liquid of all the asset classes. That is, they can be most readily converted to cash – hence the name of the asset class. Cash is the safest form your money can take but it typically generates the lowest returns. In Australia, cash averaged 2.2% in gross returns per annum over 10 years, according to the Vanguard Index Report.

In 2020, we saw the RBA cut the cash rate to an all-time low so interest rates may seem unappealing at this time, but it can be good to have some cash in a bank account because of the safety it provides and because you can access it right away when you need it. Bear in mind, though, that some providers of term deposits or savings accounts may charge a fee or reduce the interest they pay you if you decide to withdraw your money earlier than expected.

The comparison table below shows some of the Savings Accounts on Canstar’s database for a regular saver in NSW. The results shown are based on an investment of $100,000 in a personal savings account and are sorted by Star Rating (highest to lowest), then provider name (alphabetically). For more information and to confirm whether a particular product will be suitable for you, check upfront with your provider and read the Product Disclosure Statement before making a decision.

Compare Savings Accounts

Compare Term Deposits

Image source: ITTIGallery/Shutterstock.com

This is an update of an article originally published by Dominic Beattie.

If you've managed to scrape together some savings, keeping it in the bank doesn't look too crash hot.

While you won't lose money, with interest rates as low as they are, you won't get much bang for your buck.

It's the dilemma facing Liz Thomas, a commercial pilot living in Cairns.

"I've turned 30 now, and I have some money sitting in the bank. It's not a huge amount, but I just feel that it's a bit of a waste that it's not being invested," she says.

To help Liz — and everyone else with a decent but not extravagant amount of money to work with — we asked two investment experts for their tips.

To keep things simple, we asked them what they'd do with $5,000, but their advice will be just as useful to those working with smaller sums.

Pay off high-interest debt first

First things first. If you have credit card debt, a car loan or a personal loan, it's nearly always going to be better for you to pay down the debt than invest elsewhere.

"Paying off a credit card or personal loan charging 10 per cent or more would be a better way to get ahead than making an investment," says personal finance educator Owen Raszkiewicz.

"You're guaranteed to save money, it feels great and it's simple."

Three questions to ask yourself before you start investing

How long are you prepared to leave the money invested?

As boring as it might seem, if you're saving for a house, a holiday or a wedding in a few years, it's likely you're going to be best off leaving the money in the bank.

If you're thinking about taking a riskier route — like an investment in the share market — you need to have a longer time frame.

For Mr Raszkiewicz, three years is the absolute minimum for investing in shares; ideally, you want to be comfortable leaving the money invested for 10.

The reason? The longer you are invested, the more likely you're going to be able to recover from bad years in the market.

If you invested 10 years ago in an exchange-traded fund (ETF) that tracked the average return of the Australian stock market, you would have earned about 8 per cent each year including dividends.

But it wouldn't have been a smooth ride. During the 11-month period between late January 2008 and New Year's Eve that year, the same investment would have lost 34 per cent of its value.

How much are you willing to lose?

As soon as you start looking beyond the safety of term deposits and savings accounts, you run the risk of losing money, says independent financial adviser Debbie Lin.

"You need to set a goal, know your time frame and be realistic," she says.

If you don't invest, what's your best alternative?

By choosing to invest, you miss out on using the money elsewhere. Keep in mind if you have a home loan, you take no risk by paying down the mortgage or putting some money in an offset account.

It's not investing per se, but you're still getting ahead financially.

If you don't have a mortgage, your next-best option is likely to be a savings account or term deposit. While you won't get a great return, your savings account isn't going to drop 30 per cent if there's a recession either.

How to get started in shares

Australian shares have been a great long-term investment, providing both dividends and capital growth. If you're starting out with $5,000, Mr Raszkiewicz suggests sticking to a low-cost ETF.

He suggests looking at the popular ETFs that track the top 200 (ASX200) or top 300 (ASX300) shares listed in Australia. These also tend to be the funds with the lowest costs, which make them a good starting point for beginner investors.

Other ETFs can give you access to the US and other international share markets, bonds (which are basically IOUs from government and banks) and other assets.

There are also "ethical" ETFs that screen out shares in tobacco and other companies that you might not like to associate with. Whatever you choose, it's a good idea to diversify so your eggs aren't all in one basket, says Ms Lin.

"You can always split up your $5,000. Depending on what you're comfortable with, you could put some in Australian shares, some in international shares and some in bonds," she says.

The stock exchange, the ASX, keeps a list of exchange-traded products. Keep an eye on the fees, and make sure you read the product disclosure statements before making an investment.

Wait, how do I actually buy shares?

Cheap, online share brokerage services are available from all the major banks and specialist providers, but the application process can be quite involved.

Once you've opened an account and deposited some money — which you should be able to do via bank transfer or BPAY — you're ready to get started.

You'll need to know the ticker code of the product you want to buy to place an order. Typically, it will cost you $10-$20 in brokerage fees each time you buy or sell shares.

What about investing in property?

If you plan to buy your own house in the next few years, Ms Lin recommends you keep saving.

You can access property with smaller amounts via the share market by purchasing listed property ETFs or real estate investment trusts. Like most investments, there will be fees and risks involved, so make sure to do your research.

Pros and cons of putting extra money into super

While it might not sound very exciting, putting your extra money in super could be an extremely sensible option.

Your super fund already invests in stocks, bonds, property and other interesting things, and you might be eligible for a tax benefit.

The downside is that any money put into super is locked up for decades. Most people won't be able to access their super until at least their 60s.

There is an exception under the Government's First Home Super Saver Scheme, which allows people to access voluntary super contributions for a house deposit under certain circumstances.

"There are a few hoops to jump through with your super fund and the ATO (note: an accountant can help)," Mr Raszkiewicz says.

"Also, keep in mind it typically has to be your first house and there are other criteria, like limits on how much you can add each year, and you must use the money to buy or build a property within 12 months of getting it out of super."

This article contains general information only. It should not be relied on as finance or tax advice. You should obtain specific, independent professional advice from a registered tax agent or financial adviser in relation to your particular circumstances and issues.

If you’re a Brit already living in Australia, how you invest your money could have a big bearing on your future wealth. This is particularly true if you’re planning on staying in Australia once you’ve stopped work and start taking income from your pension fund.

There are many similarities, and some key differences, between how you can invest your money in the UK and Australia. Understanding these differences is important to help you make the most of tax-efficient options, and to avoid mistakes that can leave you with an unnecessary tax bill.

Here are 10 tips for investing money in Australia.

1. Your super will be your most tax-efficient investment vehicle

The most tax-efficient savings and investment vehicles are super funds.

Contributions to super funds are taxed but, at retirement, you can access the fund free of tax. This is the reverse of the situation in the UK where contributions are incentivised with tax relief, but you’ll pay tax on income you take out.

You also get a concessionary tax rate of just 15% on your and your employer’s contributions to your super up to $27,500 each year.

Clearly, the restrictions on when you can start taking money out of your super – currently age 65 – will mean that you’ll be looking for alternative investment options for shorter-term investments.

2. Other, more flexible, ways to invest

If you’re used to saving and investing money from your time in the UK, the first thing to say is that there’s very little difference in how you can go about this when you’re in Australia.

There are straightforward savings accounts, similar to the UK. As in the UK, it’s prudent to shop around for the best rate, including introductory rates.

Fixed-interest options can also provide better returns than standard rates, though you’ll be tying your money up for an extended period.

When it comes to investments the most straightforward way to invest is via an online investment platform. The type of investments you can trade are similar to the UK, including:

• Stocks and shares
• Investment bonds
• Exchange-Traded Funds (ETFs)

3. Taxation on investment profits

There are two key differences between the UK and Australia when it comes to taxation on investments.

1. There is no direct equivalent of an ISA in Australia. This means that there’s no specific investment vehicle where profits are exempt from Capital Gains Tax (CGT) or Income Tax.
2. There’s no specific rate of CGT on the profits you make when you sell investment assets. The profit you make will be the difference between purchase and sale price, less any applicable charges.

Profits from the disposal of investment assets are taxed in the same way as your income. You’ll pay tax at your marginal rate if you’ve held the shares for less than 12 months, or at 50% of your marginal rate if you’ve held them for longer than 12 months.

If you hold shares jointly, then the tax will be split between yourself and the other interested party.

The amount of tax you pay is assessed on an annual basis when you file your tax return with the Australian Taxation Office (ATO). You can use losses to offset the tax payable on gains, and you can carry forward losses to future years.

4. Moving your UK assets and investments to Australia

If you’re planning to stay in Australia for an extended period, it’s likely that you’ll want to transfer some, or all, of your UK assets to Australia.

It’s important that you manage the movement and disposal of assets carefully as there are two different tax regimes to consider. If you make a wrong decision regarding the timing of the sale of a particular asset, you may well end up with an unexpected tax bill – either from HM Revenue & Customs (HMRC) or the ATO – that you could potentially have avoided.

For example, if you’re already resident in Australia, disposal of UK assets will likely result in you paying CGT in Australia.

As with any financial decision, there are advantages and disadvantages to moving assets from the UK to Australia.

We’d strongly recommend you seek professional tax advice when considering the management of UK and Australian assets and investments.

5. Ensure you have an emergency fund set up

After setting up your super, but before starting to consider other investment options, you should make setting aside an emergency fund a priority.

As a rule of thumb, we’d suggest having around three to six months’ salary saved in a dedicated account.

Because you may need to access this at any time, you should keep this fund in an easy-access savings account, rather than invest it over an extended time frame.

6. Invest for the long term

As the old investment adage says, “it’s time in the market, not timing the market” that counts.

Having a clear understanding of what you’re investing for will give you a good idea of how much you need to invest, how long you need to invest, and what level of risk you will be comfortable with.

Investing for as long as possible can help reduce the impact of short-term market volatility.

If you and your partner are careful in managing how you draw income from your investments, you’ll also be able to minimise your tax liability in each financial year.

7. Find a level of investment risk you’re comfortable with

A key factor when it comes to investing is the amount of risk you’re prepared to accept to meet your financial goals.

Different investments carry different levels of risk and it’s always important to ensure you’re comfortable with the amount of risk you’re taking. You should also consider key criteria such as your timescale on a particular investment.

For example, your investment strategy for your super fund, with a potential timescale of more than 20 years, could involve accepting more risk in return for greater growth potential.

Over a shorter term, or when you get closer to your intended retirement date, you may want to consider a lower-risk strategy.

8. Diversification is crucial

One golden rule of investing, regardless of whether you’re in the UK or Australia, is to maintain a balanced portfolio and not to put all your eggs in one basket.

Once you’ve taken the decision to invest, you’ll find there are many different options when it comes to investing your money. These are usually referred to as “markets” or “sectors”.

Try to avoid having all investments in one particular sector. By diversifying your investments, you reduce the risk of losing money in the event of a certain market sector suffering from a sudden downturn.

9. Avoid home bias

Another key investment consideration is to avoid home bias.

Home bias is as prevalent in Australia as anywhere. It’s the inevitable effect of you feeling most comfortable with the names you recognise in the Australian economy, even when clear signs are telling you that diversifying your investment portfolio would be the most prudent, and lucrative step.

As the saying goes, “a rising tide lifts all boats”. However, even as markets react to pent-up demand finally being released post-lockdown in Australia – maybe as early as Spring 2022 – it could well be that markets elsewhere are performing better than your “home” market.

10. Income planning is a key part of your investment strategy

A key facet of how you invest your money, both into your super fund, and other investments, will be to ascertain the most tax-efficient way to take profit and income from your funds.

It’s therefore important to always bear in mind the timescales over which you’re investing.

If you’re a Brit investing in Australia, but with retained assets in the UK, bear in mind that Australia has a Double Taxation Agreement (DTA) with the UK, which ensures you don’t pay tax twice on the same income in two different countries.

So, you will only pay tax once on any assets you vest in the UK, as the amount of UK tax payable would be deducted from the tax you paid in Australia.

Get in touch

We have a wealth of experience when it comes to advising clients about their investments. We can also provide access to tax experts who can help you manage the transfer of assets between the UK and Australia effectively.

Get in touch to find out how we can help you.

There’s more to investing than super and property. Take a look at the different investment options available in Australia which you might consider when creating a portfolio.

While property seems to get the lion’s share of attention when it comes to investing money in Australia,  a 2017 study by the Australian Securities Exchange (ASX) revealed that shares, along with other investments traded on an exchange, were in fact the most popular investment choices among Aussies^1,2.

What different assets can you invest in?

If you’re interested in seeing what your investment options are outside investing in property and super, here’s a list of some of the common investment options in Australia you could consider when building your own investment portfolio.

Cash investments

If you put your money into cash investments (such as savings accounts and term deposits), the returns will often be lower in comparison to other investment products. However, these types of investment options typically provide stable, low-risk income in the form of a regular interest payment, so they may be a good option if you’re risk averse or working to a short timeframe.

Fixed interest or fixed income investments

Fixed interest investments (also known as fixed income or bonds) usually have a set investment period (eg five years), and provide predictable income in the form of regular interest payments. They tend to be less risky when compared to other types of investments, so can be used to provide balance and diversity in an investment portfolio. Fixed interest investments are issued by governments and companies in Australia and internationally.

A government bond is one example of a fixed interest investment. It provides the holder with regular interest payments, and once matured, the amount originally invested (known as the principal) can be returned to you. However, the value of the investment doesn’t increase with inflation.

There are also different types of fixed interest investments with different investment timeframes and different risks – for example, a fixed interest investment issued by a company can be risker than one issued by the Australian government.

Shares

If you purchase shares (also known as equities or stocks) in Australian or international companies, you’re essentially buying a piece of that company, making you a shareholder. If the shares of the company grow in value, the value of your investment will also increase, and you may receive a portion of the company’s profits in the form of dividends. However, if the share price falls, the value of your investment will also fall. If you manage the shares yourself, you’ll have to decide when to buy shares, and when to sell them. It’s also worth keeping in mind that you may not receive any dividends at all.

If you’re looking for how to invest in shares, get in touch with an AMP financial adviser who can guide you through the process.

Managed funds

In a managed fund (also known as a managed portfolio), your money is pooled with other investors on your behalf by a fund manager. A managed fund can focus on one asset class, for example, an Australian shares managed fund will only hold shares in Australian companies. Or, it can be a diversified managed fund and include a mix of cash, shares and property. One of the benefits of pooling your assets in this way is that it can also give you the ability to gain access to investments and a level of diversification that isn’t usually obtainable by an individual.

The amount of money you invest is equal to a set number of units, and any growth or earnings are then divided among all investors depending on how many units each investor owns. Any income generated on these earnings will also be subject to tax based on the individual income tax rate of the owner.

Because investment returns are tied to movements in investment markets, it’s important to keep in mind that putting your money into a managed fund won’t necessarily guarantee you a positive investment return.

Exchange traded funds (ETFs)

An ETF is a type of managed fund that can be bought and sold on an exchange, such as the Australian Stock Exchange (ASX), and which tracks a particular asset or market index. ETFs are usually ‘passive’ investment options as the majority of these investment products aim to track an index, and generally don’t try to outperform it. This means the value of your investment in an ETF will go up and down in line with the index it is tracking.

ETFs tend to be easy to buy and sell and have lower fees than some other types of investment products. They form part of a larger class of investment products called exchange traded products, or ETPs, which can be bought and sold on an exchange.

Investment bonds

Like a managed fund, if you decide to put money into an investment or growth bond (also known as an insurance bond), your money will generally be pooled with money from other investors, with an investment manager overseeing the funds and making the day-to-day investment decisions. This makes for a hands-off approach for the investor, which can be helpful if you’re too busy to oversee your investments, or prefer to have a knowledgeable manager making the decisions.

The main point of difference with investment bonds is the way earnings are taxed. If you hold onto an investment bond for at least 10 years, you won’t have to pay additional tax on any profits that you’ve made when you eventually sell (or redeem) your investment. That’s because such investment bonds are seen as ‘tax-paid’ investments, where earnings are taxed within the bond along the way at 30%. If you’re paying more than 30% in income tax, an investment bond may be a tax-effective structure to help you invest.

Annuities

A popular option for retirement, annuities provide a guaranteed income regardless of what’s happening in financial markets³. These can be in the form of a series of regular payments either over a set number of years (fixed-term), or for the remainder of your life (lifetime annuity). The payments you receive will depend on things like the amount you put in and actuarial calculations, which estimate future outcomes by looking at economic and demographic trends.

You can purchase an annuity through your super or with ordinary savings. It’s important to note though, that if you’re using your super money for the purchase, you won’t be able to access the funds until you reach your preservation age and retire.

Listed investment companies (LICs)

LICs are a type of investment vehicle which are incorporated as companies and listed on a stock exchange. Most LICs operate in a similar way to a managed fund with an internal or external manager responsible for selecting and managing the company’s investments on your behalf to provide diversity. LICs commonly invest in shares in other companies.

It’s important to note that LICs are ‘closed-ended’ investments, which means there’s a set amount of shares available that does not change. Shareholders can come and go, but the amount of capital in the LIC doesn’t change as investors change. This means the investment manager can focus on managing the investment, rather than trying to raise funds if a shareholder exits the investment or making additional investments if more investors come on board.

Real estate investment trusts (REITs)

A REIT is a type of property fund listed on a public market, such as the ASX, in which investors can purchase units. Similar to a managed fund, your money in the fund is then pooled and invested in a range of property assets, which may include commercial, retail, industrial, or other property sectors.

REITs can provide investors with exposure to the property market in a way that is more diversified –  commercial and industrial property and potentially more cost-effective – than buying a single property.

Gold

As a precious metal, gold is a commodity that can be bought or sold based on set market value. Some people like to invest in gold as a way to hedge against inflation. However, investing in physical gold bars can be cumbersome. Other ways to invest in gold include buying derivatives, gold receipts, gold ETFs and gold mining stocks.

Emerging trends

Australia’s alternative finance market has grown by 53% in the 12 months to September 2017 as investors continue to tap into emerging trends and explore new ways to grow their wealth⁴.

In addition to the investment options listed above, there are a number of emerging trends you might consider when building your wealth.

Peer-to-peer lending (P2P)

P2P lending is a way you can borrow money without going through a traditional lender (such as a bank). It operates by connecting investors with companies or people looking for a loan.

Most P2P lending is run via an online platform that acts as an intermediary between investors and borrowers and charges a fee-for-service. Through the platform, the lender will be able to see what loan they would like to fund, and, the borrower must pay the loan back over time with interest.

Some platforms also allow investors to diversify their investment across other assets (such as a managed fund). The details, including the amount of control a lender has, length of the loan and at what interest rate, varies between P2P providers.

Cryptocurrency

Unlike regular currency like coins and notes, cryptocurrency is a virtual currency that exists as a digital token5. The most well-known type of cryptocurrency is Bitcoin, but there are hundreds of others including Ethereum, Litecoin and Ripple.

Cryptocurrencies are kept in a digital wallet and can be used to pay for real goods and services. Transactions are recorded using a vast digital ledger called a blockchain. It’s most commonly used for online payments but can in some cases can be used in stores. However, because cryptocurrency is not legal tender, it’s not accepted everywhere and is not backed by any government.

Factors to consider when making investment decisions

Before putting your money into any investment option it’s important to make sure you understand, and are comfortable with, the level of risk involved, the investment timeframe, any potential costs involved, and how the product could help you reach your financial goals.

It’s also important to look into any potential legal and tax implications, as these can vary depending on the type of investment you make.

Risks involved with investing

Different types of investments carry different levels of risk which can influence the returns you may receive. People tend to have different appetites for risk, so it’s important to understand yours before investing. The AMP Investment Style calculator can help you to understand your risk appetite..

Generally, investments that carry more risk are better suited to long-term timeframes, as these often come with greater short-term volatility, which means they can change rapidly and unpredictably. However, being too conservative with your investments may make it harder to reach your goals.

Diversification

A good way to manage risk can be to spread your investments across different asset classes. This is known as diversification, and is one of the first things you will learn about when looking into how to invest for beginners.

Diversification reduces your overall investment risk and leaves you less exposed to a single economic event. So if one sector or asset performs badly, the other areas of your investment may not be as badly affected.

It can also be a good idea to diversify within asset classes. For example, a share portfolio may hold shares across different sectors such as banking, resources, healthcare and technology, and across both domestic and international markets.

How to start investing

If you’re interested in building your investment portfolio, you can use these tips to help you get started:

• Do your research – think about how much you can afford to invest, what your options are, and what types of investment products you could use to help you reach your goals.
• Know your risk profile – work out how much risk you’re willing to take and what types of investment products might fit within this. Different investment products carry with them different levels of risk, so it’s important to understand the risk involved in each investment product or strategy you’re considering.
• Speak to an adviser – if you have any questions or want more help or information, speak with your financial adviser. If you don’t have an adviser but would like more information, you can call us on 131 267 to find an adviser near you.

_{1 ASX, ‘Australian Investor Study 2017’, pg. 4, figures 2, 3
2 ASIC’s MoneySmart website, ‘Annuities’, https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/income-from-super/annuities
3 PMG, ‘Cultivating Growth: The 2nd Asia Pacific Alternative Finance Industry Report’, 20 September 2017, pg. 71, paragraph 1 
4 ASIC’s MoneySmart website, ‘Cryptocurrencies’, https://www.moneysmart.gov.au/investing/investment-warnings/virtual-currencies}

A lot has been written about how difficult it can be for young people to invest in property – we won’t mention smashed avo if you won’t. As well as needing a sizeable deposit up front best short term investment options australia apply for a home loan, you need to demonstrate you can comfortably afford your mortgage repayments, because once your application gets approved, best short term investment options australia, you’ll have a massive debt to manage for the next 30 years or so.

But if you can get past the first hurdle (for example, best short term investment options australia, getting your parents to sign as a guarantor for your loan in lieu of a deposit), there are two ways you can make money from a property investment:

1. Earn income as a landlord by renting the place out
2. Wait for the property to increase in value, and sell it at a profit

While some investors “flip” properties by buying them, renovating them, then selling them quickly, property is more often treated as a longer-term investment, to earn money in rental yield and/or capital growth over time.

It’s important to remember that there are no guarantees in property investment (or in any other type of investment, for that matter). A property located in a growing suburb could significantly increase in value over a relatively short time, though some investors find themselves stuck if they can’t attract tenants and the value of their property falls.   

You can compare home loans at RateCity and look for first home buyer loans or investment mortgages that suit your budget, or you can compare the mortgage offers available from specific lenders, such as UBank or Bank Australia.

Minimum investment:

Applying for a home loan requires saving a deposit. While most lenders prefer a deposit of at least 20% of the property’s value, you can still apply for home loans with a deposit as low as 5%. Keep in mind that deposits of less than 20% also require paying for Lenders Mortgage Insurance (LMI), which can be expensive. 

One possible alternative to saving a deposit up-front is to have a guarantor (usually a parent or other close relative) secure the deposit with equity in their own property. However, best short term investment options australia, this could put their own finances at risk if you default on your mortgage repayments. 

Another potential lower-cost option to invest in property is using a service such as BrickX to purchase fractions (or “bricks”) of an investment property, and receive a corresponding fraction of the property’s rental income and/or capital growth if you choose to later sell. You may also be able to consider rent to own money making jobs in australia such as OwnHome, though it’s important to check the fine print and get financial and bitcoin investors forum definition advice first. 

What is the main reason you are investing?

What options are available for short-term investors?

Related article: How to buy and invest in Gold in Australia

Why would you consider investing in the short-term?

Compare Online Share Trading Accounts with Canstar

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