What should I do with the money from my First Home Saver account?


While Australians who participated in the first home saver account (FHSA) scheme will no longer have a government-subsidised savings account earning a superb interest rate, the good news is these savings can now be put to other uses to continue to maximise wealth.

For those who have saved up a 20% deposit for a property, this could be a good time to buy.

However, the average FHSA balance is just $12,800, so most participants will need to keep saving.

first home saver

For anyone within a few years of getting a deposit, a high-interest account is the lowest-risk option for growing your savings.

However, with Australian property prices up 24% in the past three years, bank interest of 2%-4%pa means that it may take longer than you expected to reach your goal.

For those who are still a few years away, a portfolio of exchange traded funds (ETFs) can be a good medium-term savings strategy.

Investing in broad markets provides the opportunity for higher returns, low fees, easy access to funds and broad diversification to reduce risk.

A diversified portfolio has historically achieved a return of roughly 8%pa over the long term. However, as with any investment, ETFs do have market risk.

The plus side is that ETFs are easy to sell should you want the money for something else (like buying a home).


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