Ask Paul: I'm 29 with $200k savings, should I buy property?


Published on

Q. I am a 29-year-old working as a civil engineer.

I have worked around Australia in fly in, fly out construction and managed to save $200,000. I lived with my parents on my six-day breaks, which helped me save money.

I am now permanently living in Sydney earning $87,000pa plus super and looking to start renting a place with my girlfriend.

propery first home house fifo fly in fly out first house buy real estate ask paul clitheroe

I have an $8000 HECS debt, own my car and have no bank loans. I have always wanted to invest in property but have been quite hesitant as FIFO work has its end date and also I didn't want to risk my savings on a poor property investment decision.

I am hoping you can provide me with some advice on what would be the best way forward. - Matt

A. Wow, $200,000 in savings at 29! Matt, I know the life of a fly in, fly out worker is not an easy one and you have worked really hard to save this money but I am still impressed. Given the effort you have put in, I share your concern about losing it.

But you should not allow this fear to stop you from getting ahead. First, forget about the HECS debt - it is the cheapest and best loan in town. It will get paid off in time out of the additional tax levy on your salary.

Next, chat to a lender or two about your capacity to borrow given your big deposit and your new salary.

In terms of losing the money, if you buy a well-located property at a reasonable price and you allow for bad things such as no tenant for a while and you have income protection insurance in case you have an illness or accident outside work, plus you factor in interest rates rising, it is pretty hard to see how you would lose your money.

Sure, at some stage property values will fall but if you hold a good, well-located property for 10 years or more I and every other expert I know will be hugely surprised if you lose money.

Get stories like this in our newsletters.

Related Stories

Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the television show Money, radio, and most notably this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is Chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.