Buy now for the long term

Prices are high but Aimee could ...

Q I’m 31 and have just returned from two years of overseas development volunteer work (with small allowances paid but a negative income) and will earn $105,000pa including super. I have $70,000 in super, $25,000 in an aggressive managed fund and a $233,000 mortgage on a $350,000 negatively geared unit in Queensland.

Would my best strategy be to: invest in shares or a managed fund, pay down my mortgage or save to enter the expensive Melbourne property market? I plan to start extra contributions to my super when I am 35.

Good on you, Aimee. This has not been good for cash flow but I know that the experiences and your personal growth will have made the two years a fantastic time. But now back to the capitalist world we live in.

It sounds as if you are living and working in Melbourne. If this is likely to be permanent, I do think owning where you will be long term is a great plan. The population planning people tell me Melbourne will have some 8 million people in a bit over 30 years, so it is hard to imagine a well-located property doing badly in the long run.

I can’t see much point paying down a negatively geared property loan and agree that adding to super is a good plan, but not right now as you can’t access the money for about three decades. So I’d recommend the savings route. You could do this, with more risk, in your managed fund or use an online saver with decent interest. Along with a good salary, some super, your managed fund and investment property, you are in great financial shape at just 31. It does depend on your work/ life plans, but if Melbourne is your likely base then, in time to come, owning property there is a good plan.