ETF Best ETF option to park cash in for next 12-18 months

Discussion in 'Shares & Funds' started by Nir, 17th Feb, 2020.

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  1. Nir

    Nir Active Member

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    I am posing this question on behalf of my brother. I've been following and participating in this forum (regarding property) for some months now and have learned heaps! Hoping to get some tips/direction regarding the following circumstances.

    • Savings in question: $60k
    • The Savings will be used for a small property purchase in 2021.

    Predicament:
    Due to some commitments, he is unable to use this cash for the intended purpose until mid-2021. With the ETF market doing well (and savings account interest rates being low), we think the best option would be to place the funds in an ETF till he is prepared to use it.

    Our challenge:
    This is an area neither of us have invested in before. We've researched what has performed well over the last year but would like to know what else we should be considering.


    What would you do?


    Much thanks in advance
     
  2. Trainee

    Trainee Well-Known Member

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    So you think etfs will perform well in the next 18 months because they have performed well in the last 18 months?
     
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  3. SatayKing

    SatayKing Well-Known Member

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    Becoming a common question.

    Given the time-frame the best ETF is one with the ASX Code CASH.
     
    Bunbury, Player, Brumbie and 2 others like this.
  4. Nir

    Nir Active Member

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    No.



    Just considering it as a suitable product for the circumstances. Flexibility required to pull the money out when needed so fixed term deposits aren't a good option.
     
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  5. Redwing

    Redwing Well-Known Member

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    I think UP Bank, Xinja and 86400 all offer 2.25%
     
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  6. Brumbie

    Brumbie Well-Known Member

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    AAA is also good. Make sure you buy on the 2nd of month (ex div) then you can sell anytime and capture the return.
     
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  7. MarkW

    MarkW Well-Known Member

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    Something else to consider is the possibility (not that unlikely) that when he wants his cash, his ETF shares will be worth less than when he bought them.
     
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  8. Player

    Player Well-Known Member

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    Based on the information given, return of capital is more important than return on capital. For such a short time frame, some type of deposit account is probably the most prudent.
     
  9. sfdoddsy

    sfdoddsy Well-Known Member

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    In a similar situation recently (but higher amount) I went for QPON.

    Given the amount though, a few points aren’t going to make a massive difference.
     
  10. The Falcon

    The Falcon Well-Known Member

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    You just said mid 2021

    A term deposit maturing Q2 2021, covered by Govt guarantee. Do not put the funds into the market.
     
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  11. Ross Forrester

    Ross Forrester Well-Known Member

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    If you invest in a capital stable etf you will generate very low returns.

    Make sure you factor in the broker buy and sell fees on the etf total return on what you eventually get back.

    For $60k over 15 months the ultimate net answer might result in a difference of $256 and a lot of paperwork so the accountant bills you $300 to consider the transaction and return it properly.
     
  12. RogTheBear

    RogTheBear Well-Known Member

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    It's not generally regarded as prudent to put money in the market for a short time frame like that. As was said - return of capital, not return on capital is the aim if the money is needed in a years' time.

    Pick the wrong thing and you lose 10%, 15%, 20% of it and how's your brother going to feel about that? It can happen.

    You can still get >2% in a high interest online bank account. Take it.
     
  13. Nodrog

    Nodrog Well-Known Member

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    +1

    May be able to do better with a high interest online savings account including BONUS offers but the TD gives a guaranteed rate until maturity.
     
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  14. SatayKing

    SatayKing Well-Known Member

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    Could hand it over to me to look after. Best solution ever in my view.
     
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  15. Nir

    Nir Active Member

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    Thanks all, this was very informative With our limited experience it's sounding like a high interest rate account is a better, safer path.
     
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  16. FireDragon

    FireDragon Well-Known Member

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    Edit: Please ignore, don't think the suggested method will work.
     
    Last edited: 29th Feb, 2020
    Nir likes this.