Ask Paul: I'm 20 and I've saved $42,000, where should I invest?

Q. I'm a 20-year-old commerce student, with one year of study left. I work casually, with shifts here and there, and have managed to save $42,000.

All of this money is in a share portfolio, with about 80% of it being in small cap, more speculative shares, and at the time of writing it is valued at $58,000.

What do you recommend I do to invest at this age in terms of choosing between holding all my money in shares or property?

I will be $30,000-plus in HECS debt by the time I finish university.

I don't want to waste any time and want to buy an investment property as soon as I can but I know I don't have enough money or a secure full-time job at the moment.

I also don't know if I should start selling these riskier, small-cap shares and take the $16,000 profit to start fresh and re-invest in safer blue-chip companies. - Josh

Good job, Josh. You are going to do very well with your money. At the age of 20 you are already all over it.

Let's not over-complicate this, though. I think you need flexibility and access to your money until you settle into full-time work.

Who knows, you may need capital to start your own business or to travel. Property will really tie you down. The market is also soft and I don't see it doing much for the medium term.

You are also really young. Blue chips are great for oldies like me but if your small caps are doing well I don't see any reason to change.

Please remember to have plenty of fun while you are young!

Get stories like this in our newsletters.