Best place to store cash in the short term?

Discussion in 'Investment Strategy' started by milobear, 5th Feb, 2020.

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  1. milobear

    milobear Well-Known Member

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    Hi,

    We are planning to upsize our PPOR in the next 6-12 months. We currently have the cash sitting in our PPOR offset account. Interest rate on the home loan is 3.29%.

    In the short term, is there a better place to park our money rather than the offset? I was exploring ETFs/shares but wasn't sure if a 6 months period is a good idea.

    The cash will be used for our next PPOR. Ideally we would've liked to purchase now, unfortunately, we are slightly off on our deposit so we'll need a couple of months to build the deposit.

    So if there's a better place to put the cash short term, it would help speed things up a little.
     
  2. ashish1137

    ashish1137 Well-Known Member

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    Stick to the safest option available. :)
    If possible, use fixed deposit account in overseas asian countries but thst is also subject to currency fluctuations.

    Regards
     
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  3. See Change

    See Change Well-Known Member

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    If this is money which you don't want to risk , the PPOR offset account is ideal , unless you have a IP offset account at a high rate .

    You're welcome to use one of ours . We'll look after it .....

    If you want to put it at risk , shares are a great option ....

    Cliff
     
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  4. SatayKing

    SatayKing Well-Known Member

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    It is still all about ME!
    Your money but Whoo do you like putting your head into the mouth of a tiger? So easy to do your capital in six weeks let alone six months. The share market is not a bank.
     
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  5. Morgs

    Morgs Well-Known Member Business Member

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    You're earning a nett 3.29% risk free rate at the moment with instant liquidity and no transaction costs.

    You could probably find a gross yield higher but not without some form of risk, transactional cost, etc. You'd also need to do the math on how much higher it needs to be to improve on the current nett yield.
     
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  6. timetoact

    timetoact Well-Known Member

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    As Morgs alluded to.
    For 6 months, if you achieve a higher yield elsewhere you will be subject to full CGT. So the actual $$$ amount will likely not be worth the risk.
     
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  7. wylie

    wylie Moderator Staff Member

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    I'm with the others. Stick to the safest, low risk place. Offset sounds safe.
     
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  8. milobear

    milobear Well-Known Member

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    Thanks all! will keep the cash in the offset.
     
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  9. Omnidragon

    Omnidragon Well-Known Member

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    Credible mezz debt funds offering 9% with monthly liquidity
     
  10. wylie

    wylie Moderator Staff Member

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    That would have to come with high risk, no?
     
  11. Omnidragon

    Omnidragon Well-Known Member

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    You’d have to review the portfolio of what they hold
    Some debt funds are pretty low risk now, say 60% lvr first mortgage at 11% lend. Banks are not very commercial these days as we know, and they don’t lend to high credit quality stuff, preferring of course 90% lvr first home owners who’ll probably lose their jobs in a recession. That’s why guys like MoneyMe, Prospa etc exist, as does Macpac and Valarah etc
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    as an aside why wait ?

    That 2 mths in the market you may be looking at may be X % higher ?

    ta
    rolf
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Beat me to it !

    ta
    rolf
     
  14. milobear

    milobear Well-Known Member

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    Hi Rolf,

    If we were able to purchase now, we would, as we're expecting the market to head north, unfortunately, we will need another few months to get enough deposit. We intend to save another 80k by mid year so we don't incur LMI on the purchase. We are also limited to the lenders available due to serviceability.

    Another option is to sell our current PPOR, although we prefer not to. Also, no equity to extract either.
     
    Last edited: 9th Feb, 2020
  15. craigc

    craigc Well-Known Member

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    An IP with a higher after tax rate,
    don’t forget PPOR is 3.29% after tax, so a 4.5% IP offset is only 3.0% after tax rate at say a 33% marginal tax rate.