[cs_content][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text]
Hi Tash, I’m renting and looking to build up a deposit to eventually buy a property and pay for our wedding and holidays. I’ll have paid off my uni and car loans soon so I’ll have some extra cash to start investing and saving, and I’d like to start thinking about where to invest this money so I don’t just spend it! I’ve considered term deposits but you generally need $5,000 minimum to start these, also interested in shares possibly.
Would love to know your thoughts?
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]First things first[/x_custom_headline][cs_text]As always, I recommend starting with saving three months’ worth of emergency expenses. Because it’s possible that you’ll need quick access to these funds in the short-term, they are best kept in a high interest online saver account rather than a term deposit (orin the share market). There are plenty of online comparison sites like Mozo, Finder, Canstar, or Ratecity to help you find the latest deal, just be aware that any honeymoon rates are special intro offers that expire after a period of time, and make sure you factor in the revert rate and any fees when making your decision. [/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Then you can think about short-term investment…[/x_custom_headline][cs_text class=”cs-ta-left”]You mentioned you want to eventually buy a property, and also cover your wedding and holidays. Weddings and holidays, like emergency savings, are typically considered short-term goals so again, not generally suited to volatile investments like shares. But a term deposit may be a suitable place to stash this cash since you know ahead of time when you will need the money. Again check out comparison sites as there are quite a few term deposits on offer with a minimum investment of $1,000 (not $5,000).[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]…next up, long-term investment! [/x_custom_headline][cs_text]As for the share market, let me illustrate why timeframe is important with a couple of randomly-selected share examples.
Example 1: Commonwealth Bank (CBA) : Here are some CBA prices over the last three months. [/cs_text][x_image type=”none” src=”http://www.womenwithcents.com.au/wp-content/uploads/2017/05/CBA-share-prices.png” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][cs_text]Over the longer-term, CBA shares peaked at $96.32 a share early in 2015 and have yet to return to that price point. For the most part in recent years the share price has fluctuated between $71 and $85.
Example 2: AFIC
Here is AFIC’s performance over the last 3 months[/cs_text][x_image type=”none” src=”http://www.womenwithcents.com.au/wp-content/uploads/2017/05/AFI-shares.png” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][cs_text]But over the last few years, (longer-term) their share prices have fluctuated between $4 a share and their peak of $6.39.[/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]So what does all this mean?[/x_custom_headline][cs_text]What I want to illustrate here is that shares are not a great short term investment – especially for situations where you are not able to pick the best time to sell. Let’s say you bought CBA shares at $86.52. You really don’t want to have to sell them at $78.89 two months later just because the dishwasher broke down!
The key to successful investing in the share market is often being able to hold shares through the short-term fluctuations so you can benefit from longer-term growth and sell when it looks like the right time – rather than just when you need the money.
And because shares can take years to grow, having access to other sources of cash (for emergencies, and things like weddings) is important.
So while making 1-2% interest on your savings doesn’t sound great, it’s far better than a potential 8% loss on those CBA shares in the above example (not to mention brokerage fees on top!).
Now, when it comes to saving for a house, it’s a question of flexibility. If you have locked yourself into an off-the-plan purchase for example, putting your money in the share market is not a good idea because you’ll need to access your funds at a specified time (which means if the share market takes a downturn at that time it’s not good news for you!).
If, on the other hand you are happy to wait it out and buy in around five or ten years’ time if that’s how long it takes for your investments to grow sufficiently, then the share market could become a viable investment option.
Check out our Making Cents of Money program if you’re ready to delve a bit deeper on investing (among other things) but in the short term, good luck with your saving![/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”rgb(37, 37, 37)” parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 0 0px 25px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Submit a Question![/x_custom_headline][cs_text]Have a finance question you’d like answered? Why not drop me a line! Each week I would love to answer a question from the community. Click below to get in touch.[/cs_text][x_button size=”global” block=”false” circle=”false” icon_only=”false” href=”mailto:tash@womenwithcents.com.au” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””]ASK TASH[/x_button][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 25px 0px 0;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_image type=”none” src=”http://www.womenwithcents.com.au/wp-content/uploads/2016/07/Email-photo.jpg” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” separator_top_type=”none” separator_top_height=”50px” separator_top_angle_point=”50″ separator_bottom_type=”none” separator_bottom_height=”50px” separator_bottom_angle_point=”50″ style=”margin: 0px;padding: 45px 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text style=”font-size:12px;”]The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
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