Investing $30k short term - alternative to property?

Hi guys,

I currently have ~$30k in my offset account but I'm currently on probation in a new job so can't buy another IP (and don't want to) for another 5 months.

It's offsetting a loan which is at about 5% pa so I'm happy for it to sit there and continue doing this, but just wondering if anyone has any suggestions on alternative uses for the money which will yield a higher rate over the next 5 months or so?

I want to have the funds available again in 5 months time so I won't look at options which will lock this money away for a longer period than this...

Cheers
 
An offset is often the best option because, even if you manage to find something at, say 6% you will then have to pay tax on the money earned, thereby meaning you pocket less than 5%. Especially if you don't want to tie the money up.
 
Don't forget that if you're having to show genuine savings it's not going to help seeing you moving in and out of cash (if you were to invest in a different asset class besides cash). Even if you achieved a 10% yield the pre-tax profit would only be $625 more than the net saving from your offset account. Meanwhile you carry the risk of losing the deposit/having it reduced.
 
Hi guys,

I currently have ~$30k in my offset account but I'm currently on probation in a new job so can't buy another IP (and don't want to) for another 5 months.

It's offsetting a loan which is at about 5% pa so I'm happy for it to sit there and continue doing this, but just wondering if anyone has any suggestions on alternative uses for the money which will yield a higher rate over the next 5 months or so?

I want to have the funds available again in 5 months time so I won't look at options which will lock this money away for a longer period than this...

Cheers

Hmm i'd present a different view - find somewhere to invest it that earns more than 5% pre-tax. Shouldn't be that hard, thats not the highest barrier to push through.

Regarding the tax comment, having funds in your offset reduces your interest tax deduction. Assuming you have taxable income to soak up, it is taxed at your marginal tax rate (the opportunity cost of not claiming that interest). Therefore the return is closer to 3.5% post tax, again, assuming you have income to soak up and the account is in a personal name.

This sort of situation gives you the chance to explore and learn about other asset classes.

In terms of where to find that return...explore usual asset classes (stocks, bonds, funds, etc).

Cheers,
Redom
 
Back
Top