COVER STORY
Where to invest $10k
Last month Money turned 20 and as a part of its celebration the magazine ran a series of social media posts about the varying prices of goods since 1999. In essence, the social posts remind us the dollar doesn't stretch as far as it once did. A quick check of the Reserve Bank's inflation calculator suggests a $1 bag of lollies in 1999 would have cost you $1.66 in 2018 – a 65.6% increase in 19 years. Would my 12-year-old self in 1999 have bought the same lolly bag in 2018 at its new price? That's a tough question, but I'm sure, like any good consumer, I would have weighed up my options.
For the purposes of this story, a $10,000 basket of goods and services in 1999 was valued at $16,558 in 2018 (based on inflation only).
Dial the clock back 50 years to 1968 and you could buy a home in an Australian capital city for $10,000 or less. Nowadays this is barely the beginnings of a home deposit. However, the inflation calculator tells us that same $10,000 in 1968 would now be equivalent to $123,825 – and possibly enough for a home deposit depending where you buy.
So if you're in the fortunate position to have a spare $10,000 in 2019, where should you invest?
This annual Money magazine cover story is a question that always challenges even the most experienced financial professionals and once again we've approached eight experts to give their views.
From investing in exchange traded funds to paying down credit card and other personal debt; from contributing extra to superannuation to having a property buying agent help find you that perfect home, there are many ways to approach this perennial question.
For yours truly, it's a question I've been grappling with since the summer break as the family has managed to save some extra money and we want to see it work better for us. Given current term deposit rates, we know we're not alone in thinking there are better investment opportunities on the horizon.
Three editions ago, in May, we asked three financial experts whether readers should pay off their mortgage or invest. It made me consider the question – where to invest $10,000? – more closely. Right now I'd say it is a toss of the coin: do we use $10k to pay down some of our mortgage, or do we attempt to grow it by investing in an ETF or other managed fund.
Either way, when we eventually hit the “go” button there will have been some careful consideration. It's likely we would have taken a look at the MoneySmart website as a guide. It answers this same question – where to invest $10k? – and explains that the first thing you need is a solid set of financial goals. It suggests to first pay off debt, then look at an emergency fund and, finally, to explore ETFs and index funds or boost your super. Any of those options are good ones and it's an investment that should carry you well into your financial future.