Ask Paul: Should I buy shares now or keep saving for property?


Published on

I'm single, 26, and living at home with my folks (bless them). I've been home for a year and a bit now, after travelling and having a good time. 

I have a full-time job earning roughly $70,000pa. I put $300 a week into my superannuation (with Sunsuper). I have $50,000 in savings and $40,000 in Newcrest Mining shares from previous employment perks. 

At this point I'm unsure what to do with my money just sitting there.

paul clitheroe

Continue saving another year or two for a decent deposit, with the possibility of renting the property out? Or do I invest in an exchange traded fund (ETF) or have a go at the sharemarket myself?  - Lili

Well, Lili, these strange times may also work out well for you. Shares have dropped a lot since their peak and while the market is hugely volatile and, providing you invest for five years or more, the prices that I see today are attractive.

The fate of the market depends a lot on the course of this virus. The timing of people getting back to work is still uncertain. Personally, though, I can see that over many thousands of years of human history, markets and economies recover. So if you go the shares route, with time on your side, history is on your side.

I am pretty relaxed about whether you buy a range of quality shares or go with an ETF. It is really about convenience and diversification. A very low-cost global indexed fund is also a good option.

Obviously, there may also be some good opportunities to buy a property. It sounds as if you are settling down after some great travel.

If so, I do like the idea of you owning a place you could rent out. This is a personal choice, and either decent shares or a good property should work well. I can't speak for you, but put me in your position and I would be looking to use a soft property market to buy a well-located place that you may live in one day.

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 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 ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.