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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.

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.

paul clitheroe ask paul advice money questions

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 a respected financial adviser and Money's chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Got a money question? Ask Paul.
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