Ask Paul: I'm 19, should I invest in ETFs to save up a house deposit?


I am 19 years old and in my first year as an apprentice electrician, I have my own car and am living at home paying $50 a week.

I have invested $13,000 in a couple of exchange traded funds (ETFs) over the past year, have another $10,000 in CBA shares and $10,000 in cash. 

I plan on living at home for the next three or four years, completing my apprenticeship and saving, with the aim to buy my first property by 23.

ask paul clitheroe investing etfs to save up house deposit

I expect I can add $13,000-$15,000 into my investment savings each year. 

My question is whether I should keep putting all my eggs into the ETF basket or look to diversify into other investments while building the deposit.

Also, would a credit card, albeit used minimally and paid off in full each month, be of any benefit when applying for a home loan.

Do these still have any influence on bank assessments? - Mackenzie

Good on you Mackenzie, I love questions like yours.

At 19, I was hopeless with money.

My parents had given me good skills and money habits and over many years, at birthdays and Christmas, bought small quantities of shares for me and my sister.

So, I actually knew what I should do, but moving from the country town of Griffith in the Riverina to a residential college at UNSW between the ages of about 18 and 23, I basically took all the income I generated and converted it to beer.

Fortunately, I was smart enough to leave the shares alone and got a job in a pub two nights a week to fund entertainment.

Even better, back then there were no credit cards, apart from Amex and Diners for high-income earners, so at least I finished uni with no debts and the shares.

You are going down a much smarter pathway. One of the few truths in money is compound returns.

This is simply the returns you earn on the money you save, and the longer you do it the more powerful the returns.

In my view, ETFs are an excellent, low-cost diversified investment for any of us. They should work well in your situation. They will easily allow you to diversify across different investments

Then we go to your credit history. Your savings history and the amount you will have saved will be your most valuable story for a lender.

But a credit history does help. I have no hesitation about you getting a good credit card. Of course, do your research.

With discipline, a credit card gives you "free" money during the interest-free period, providing you pay it off in full by the due date.

A bonus will be the "free" frequent flyer points you will earn.

Used well, a credit card is a very low-cost product that can more than pay for itself with the points you earn. It will also build your credit history.

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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. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Concerned Citizen
October 21, 2021 3.37pm

This is not good advice.

OP has clearly stated that their investment timeline

AJ Lowe
October 21, 2021 8.22pm


This advice is just terrible.

I love ETFs, don't get me wrong.

But, if I were looking to use the proceeds to buy a house (or anything else) within four years like this reader I wouldn't expose those savings to equity markets. Sure, this might pay off big time, but might also suck as an investment if markets fall.

Four years is just too short a time frame for many ETFs.

Despite terrible interest rates, a cash account or term deposit is a much better alternative for such a short time frame.

Peter A
October 21, 2021 11.01pm

Fuck me mate, sure chuck your house deposit in the market and hope it doesn't drop by 20% right before you want to buy. Also go nuts with the free money on plastic, it'll help you form great money habits.

Guess we know who's paying for the ads at least.

Rollo Tomasi
November 7, 2021 10.31am


The best time to get into property market is yesterday. Don't wait another 4 years, get in now.

Interest rates only going north. Lock a low rate in now.

You can't save quicker than prices are going up. Get in.