Where to invest $200pw
So you have $200 a week to invest but where should you put it? The best place can vary depending on your end goal. We get the experts to put together portfolios aimed at helping you achieve a different financial aim.
Saving for a home is likely to be the biggest financial outlay you will make for one single item. According to CoreLogic, the average house in Sydney, for example, has increased in value from $650,000 in 2012 to over $1,066,000 in 2017 – a 64% rise in five years.
Putting aside the affordability and housing bubble debate, to get on the property ladder you have to save up a deposit of between 10% and 20% of the property value.
Investing in a balanced low-fee portfolio of exchange traded funds (ETFs) is one smart way to maximise your savings and get you closer to your property goal.
There’s a lot to consider before you buy a home. 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
Start investing early and regularly. Investing just $200 a week might not sound like a big amount but it will make a real difference in the long-term.
Investing early means you can take advantage of compound returns, which is simply earning additional returns on profits that are re-invested. Setting aside a small amount on a regular basis can help you reach your goal faster.
Assuming growth of 7% a year, the initial $200 investment with weekly top-ups of $200 would end up being around $60,000 after five years with compounding. If after two years of investing you increase your weekly investment to $300, you could get closer to $80,000.
DIVERSIFICATION IS KEY
One of the best ways to maximise your investment returns over the long run is to invest in a broad mix of investments for diversification and keep your fees low. ETFs give investors access to both broad diversi-