Overcome the fear

QI am a 29-year-old working as a civil engineer. I have worked around Australia in fly in, fly out construction and managed to save $200,000. I lived with my parents on my six-day breaks, which helped me save money. I am now permanently living in Sydney earning $87,000pa plus super and looking to start renting a place with my girlfriend. I have an $8000 HECS debt, own my car and have no bank loans. I have always wanted to invest in property but have been quite hesitant as FIFO work has its end date and also I didn’t want to risk my savings on a poor property investment decision.

I am hoping you can provide me with some advice on what would be the best way forward.

Wow, $200,000 in savings at 29! Matt, I know the life of a fly in, fly out worker is not an easy one and you have worked really hard to save this money and I am very impressed. Given the effort you have put in, I share your concern about losing it.

But you should not allow this fear to stop you from getting ahead. First, forget about the HECS debt – it is the cheapest and best loan in town. It will get paid off in time out of the additional tax levy on your salary. Next, chat to a lender or two about your capacity to borrow given your big deposit and your new salary.

In terms of losing the money, if you buy a well-located property at a reasonable price and you allow for bad things such as no tenant for a while and you have income protection insurance in case you have an illness or accident outside work, plus you factor in interest rates rising, it is pretty hard to see how you would lose your money.

Sure, at some stage property values will fall but if you hold a good, well-located property for 10 years or more I, and every other expert I know, will be hugely surprised if you lose money.