Advice on what to do with our profit - Young Investor

Hi there,

So i'm a little lost with what we should do after selling a property & making some profit
I hope this doesn't seem like a silly questions, we have just never been in this position before as this is the first house we've sold. A little bit of a run down on our sitiation...

- sold out POPR & after paying off the mortgage & all fees we're left with $210,000 profit
- our only other debt ($230,000) is an investment loan for a property that we currently holiday let & make approx. $30,000 nett per annum
- we would like to build (or buy again) in 12 - 18 months or sooner if the Sydney property market cools down. so we want to be able to access these funds at short notice if need be
- we plan to save $1,000 each week onto this amount to go towards the deposit on our next home

Our initial thought was to get an offset account and reduce the interest on the investment loan, could anyone offer other suggestions?

Thanks so much, Lauren

 

Hi Lauren,

Usually the IP's offset is a good place for those funds, but depending on your situation perhaps not - for eg, if you're a stay at home mum and hubby is a high income earner and the IP is in his name, you'll be better off putting the funds in a term deposit in your name.

I guess what I'm saying is specific advice is probably required, or if you're happy to wing it on a public forum, more detailed info about your financial situation will go a long way.

 

By the sounds of it, your looking for a liquid short term investment over the next 12-18 months:

• Offset is likely a good bet. Rate of return will be better than TD.
• TD's are an option.
• Stocks - can go liquid easily.
• For property related strategies, can do a quick reno flip in markets where it works (unlikely to be Sydney with that deposit size and costs involved in transacting).

 

Your primary driver here is that you will need the money again in 12 months time. So liquidity and preservation of capital are the top of your investment goals.

The offset will offer you a return of around 4% (ish) capital guaranteed with immediate access and no additional fees. That is your benchmark investment return to compare others against.

 

Stocks are a very risky option if the investment horizon is less than minimum 3-5 years, ideally much longer. The stock market could collapse on Monday, for example, and nobody knows where the market will be when you'll need the funds