The question that made Paul Clitheroe break one of his rules

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Q. I am a 25-year-old South Australian planning to go backpacking overseas for at least a year from April 2020. Before I leave I intend to reserve about $10,000 to help get me back on my feet for when I return to Australia in mid-2021.

I am considering placing this money in a term deposit account as opposed to leaving it in a savings account (I won't be making further contributions to it).

But given the low interest rates at the moment, I am thinking that investing the money in some kind of managed fund, trust account or mixture of exchange traded funds (ETFs) may be a better option, albeit riskier.

ask paul clitheroe where to invest

What do you think is the best way to save and grow this money for when I return from my travels?

Hmmm. I feel I am about to break one of my longstanding rules.

Kieren, I have always argued that any investment in growth assets, such as shares, should be for a minimum of seven years.

But you are a lad of just 25 years, full of life and enthusiasm.

I suspect that when you get back, finding work won't be a huge deal for you and the $10,000 will be left alone.

Even if you need some of it, I doubt you will need it all.

So I am going to make an exception to my strongly held views and suggest you go with the mixture of low-cost ETFs giving you exposure to Australian and global markets.

Yes, you are right, this is more risky, but any 25-year-old can afford a bit of risk!

Send me a photo from somewhere financial, maybe a stock exchange overseas or similar. I'll see if we can publish it and check how your ETFs are doing.

Have a great trip.

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Paul Clitheroe AM is the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing. He is also chair of InvestSMART Financial Services, and previously led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.
Comments
Anita Burgess
January 17, 2021 4.18pm

Is it possible to make an appointment for some advice re.building another house on my property please

Money magazine
Verified
January 18, 2021 8.54am

Hi Anita,

Unfortunately Paul Clitheroe is not available for appointments.

If you would like to meet with a financial planner, you can visit https://fpa.com.au/ to find one in your area.

Good luck!

- Money team