Parking funds until purchase next year

[mumbai]

hey guys,

One of my friends has migrated recently to Melb and plans to buy a PPOR in a year or two. He has 200K saved and plans to use that as deposit.
He has that amount in a bank getting 4% interest.
Is there a better place he can invest that money in the mean time, that will provide better returns. He should be able to access it as and when he plans to buy the residence?

 

[mumbai]

BUMPING!!

and 10 Chars...

 

[MichaelMik]

Well I bought 7k worth of Sirtex medical shares, ASX: SRX for $23.70 on Friday and today they got as high as $25.62..

Is infact a nice tasty 8.1% return in 3 working days

Its actually the first shares I have ever bought in the hope of accelarating saving for a deposit, so I hope its not just begginers luck!

 

[tobe]

why is he waiting 2 years to purchase?

anything higher than bank term deposits are going to come with a risk of capital loss. Is your friend prepared to wear this risk? If so, he should definately invest in shares, managed funds, bonds or something similar. If not he should keep his cash in the bank.

Serioiusly though, why doesnt he just buy his PPOR now? Is he waiting for prices to fall or something?

 

[mumbai]

why is he waiting 2 years to purchase?

anything higher than bank term deposits are going to come with a risk of capital loss. Is your friend prepared to wear this risk? If so, he should definately invest in shares, managed funds, bonds or something similar. If not he should keep his cash in the bank.

Serioiusly though, why doesnt he just buy his PPOR now? Is he waiting for prices to fall or something?

He has just migrated 2 months ago from overseas. He does not have the required documents to show (income sources) to get a loan. He is self-employed and his accountant told him that he has to wait atleast till next financial year, file a tax return and then will be eligible to secure a loan.

 

[Paul@PFI]

The difficulty is earning income v's incurring risk. Buying Silex shares as an example. They may fall. Many savers don't want that. They want capital stable funds and earn some hi interest. These days 4% is top of the charts I'm afraid. Unless you want to take some risk.

You should consider risks v's rewards. Also don't tie it up in a TD. The break costs penalties to access your own $$ aren't worth it.

Consider a hi yield ING account or similar ??

 

[Nattl3s]

I would also go for a high interest account, one with low fees. cheers nat

 

[redwing]

I was going to say as Paul did that 4% from the bank is not to bad nowadays

 

[Jamie M]

I would also go for a high interest account, one with low fees. cheers nat

Same - that's what boring old me would opt for. At least you don't run the risk of losing your house deposit.

Cheers

Jamie

 

[Marty McDonald]

I offered this same advice to a friend in 2010. In hindsight he would have been much better off in shares for the 3 years it took him to get around to buying. Much better off.

Perhaps a 50/50 allocation between shares / cash would be a good way to go.

 

[starter]

I offered this same advice to a friend in 2010. In hindsight he would have been much better off in shares for the 3 years it took him to get around to buying. Much better off.

Perhaps a 50/50 allocation between shares / cash would be a good way to go.

Yep, this would be the approach I would take in the same situation. I'd be avoiding the spec shares obviously and would stick to something like the index funds.