Good saver Puneet eyes ... Investing in property

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Q I am 30, single and working full-time. I migrated to Australia in 2009 and landed my first job in early 2010. Starting from scratch I have been able to save close to $100,000 which I have deposited in a USaver online account. I am debt free and have close to $15,000 in my super account.

Also I have invested $6000 in a first home saver account started in 2011-12. I am looking forward to buying my first investment property pretty soon (one to two years). What is better – investment property or managed funds? Any other suggestions?

A Puneet, since arriving in Australia it sounds like you’ve really landed on your feet. You have saved around $100,000 in a few short years while avoiding bad forms of debt. Fantastic work all around.

A first home saver account (FHSA) is a great way to save a deposit for a house, for those with enough patience. Under new legislation, you can now buy your first home before your FHSA money becomes eligible for withdrawal, and then use the FHSA to pay down the mortgage after you have made contributions of more than $1000 in four separate financial years. You also need to make sure you live in the house for at least six months to keep within the FHSA rules.

I recommend a minimum investment period of seven years-plus to invest in managed funds or shares. So if you are looking to buy a property in the next year or two the best place for your money is in high-interest savings accounts (where it is at present) or term deposits.

Once you have a big enough deposit (20%-plus; you have already accumulated enough for a $450,000-plus property), I think a managed fund or topping up your super could be a nice complement for an investment property to diversify your portfolio.

But initially I think a well-located property is a solid place for your next investment.

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