Rethinking what to do with my money?

Hi All,

I'm 25 and not in the property market.
My 'share portfolio' consists of NAB and VOC at the moment. This is accounts for about 5% of my dollary doo's (95% cash atm.)

I've begun thinking about progressively investing into ASX:VAS, over the next 12 -24 months, and putting my reducing my cash down to 10%. Progressively investing as we head into a downswing and averaging as I go.
A term deposit will see me in line with inflation, yet perhaps this is the best approach if I do decide to withdrawal in the next 5-10 years.
However, as I don't own any property; I will likely want to enter the market in the next 5 - 10 years. (Renting is dead money, and takes a fair chunk of my salary.
Is equities more aligned to those with a house paid off / looking toward the future?

Thanks!

I think it largely depends on your personality and investing style. I dont think 5-10 years is a long enough time frame for investing in equities, but I virtually gaurantee there will be other replies from those who see the world differently to me!

I personally think owning your own home, frees up money to invest in equities later.
The market, goes up and down constantly, so there is always an opportunity to enter the market, also you can add small or large parcels of shares depending on finances.
With a property it is a big chunk of money, I think if the opportunity arises that housing takes a big fall, one should get into a property and pay it off as quickly as possible.
Then get back into equities.
Like others have said, it is a personal choice, I have know people who have done it both ways. There isnt a right and a wrong, both ways take discipline and sacrifice.
Just my opinion.

Now is a good time to buy into VAS or any of the index funds, as for the next 12 - 24 months we could see anything though new highs for the index funds would seem unlikely - its not impossible.

At 25 you should be at least a little aggressive with your investments.

If I had my time again I would definitely focus on owning my shelter first before stock market investments. You could do both but becoming debt free, the tangible asset and the additional mortgage payments added to your income is solid.

I bought a lawn round!

Think outside the square

How can you invest your money
To make more money

I built up clients (assets)
Cut the lawns after work and on weekends
Sold off portions of rounds to guys like me
Eventually selling full rounds as it turned out to be
My first full time business.

Doing things that everyone else does will leave you just like everyone else.

Appreciate the advice everyone. Everyone has conflicting views, yet I guess everyone has taken a different path.
I'll sit and think on it for the time being & continue scratching my head!

Play around with this excellent NYT rent v buy calculator to see how your assumptions dictate the huge differences of opinion on whether it's better to rent vs buy:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I personally am renting and don't consider it as dead money at all.

I look at my friends who bought and if they don't like their job they basically have to suck it up as they need the money for mortgage payments whereas I'm sitting on a relatively large pile of diversified surplus and can walk away whenever I want.

If I decide I want to move to Melbourne (where apartments in the city can be had for under $500k), or offered a job in another country, I can uproot and move easily.

If I decide I want to get a mortgage I can easily liquidate everything and go to the bank.

I'm pretty conservative with debt. Lots of success stories from those who leveraged up and made it work, but I have witnessed the other side of that coin from people who got hurt with debt in the GFC.

If rent is taking up a big chunk of your salary, then rent somewhere cheaper. I rent in one of the suburbs in Sydney which is still pretty cheap (lots of apartments), but has FTTN NBN, new apartment and 30-40 mins to the city where I work by train. Split with my partner.

A term deposit will see me in line with inflation,

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A term deposit might match you against what inflation has reported recently, but CPI and other measures are definitionally backwards looking and very lagging. You don't know what future inflation will be without some research and modelling. Additionally, headline inflation may or may not be appropriate for you if you want to buy a house.

Is equities more aligned to those with a house paid off / looking toward the future?

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Equities are quite volatile. If you're investing and not trading it's better to think about it like you have $100,000 and you start a small business like a cafe or kebab shop. Every day someone walks past the front door and shouts out a price they might buy the cafe from you. Maybe if they offer $500,000 for the cafe you'd sell it. If they offered you $50,000 you probably wouldn't. Otherwise you just keep going about your business, day in and day out, earning a return from your initial investment and re-investments (like a new coffee machine or bigger shop) you might make over time. You're not interested in the price of the business, but rather what it will return you over a long period of time. Maybe you'll sell it when you retire.

Mates, imagine if you stumped up all your savings for a deposit and mortgage in Sydney Opal Tower...

What would you do with F-you money?

Option A:


Option B:


Which option is most likely to lead to F-you money in the first place?

If you have a robust investment/trading system, which can deliver high future returns, then why forfeit such an opportunity cost for a low performing asset class (when un-leveraged and all costs are accounted for).

Too many property ownership biases in Australia - the primary reason it is touted as the ultimate wealth building asset, is because it's a forced savings asset (most people suck at money).