Ask Paul: Should I risk my house deposit on shares?


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Q. I am 22 and currently earn $50,000 working full time while studying part time.

Currently I am fortunate enough to be living at home and have managed to save $60,000, which is in a high-interest savings account.

My goal is to buy property in 2019.

paul clitheroe ask paul advice money questions

My dad keeps telling me to invest some of my saved money instead of it just sitting in the bank but I have no clue where to start or what the simplest options are.

Do you have any suggestions as to how I should start investing, or is the bank the safest option? - Alice

A. Alice, there is no argument the bank is the safest place. The money law of gravity is "risk equals return".

I don't disagree with your dad but the best way to mitigate risk is time. So owning quality shares for a year is really risky. Owning them for over a decade is not.

But you tell me that you want to buy property in 2019.

This means you would be investing for only a year or so and I really don't want you to do this. Sure, you might get lucky but you might also lose a large percentage of your deposit if markets fall.

I don't have a crystal ball but I do understand risk and return. If the money is needed in 2019, keep it in the bank.

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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 Money TV show, and 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.