Why EV ETFs are my top pick for a $10k investment
When Coldplay lead singer Chris Martin and actor Gwyneth Paltrow dissolved their marriage in 2014, little did they know that they would make famous the most mocked and derided expression in relationship history: conscious uncoupling.
More than a decade on, I'd like to resurrect the term to serve a better purpose: banks have to consciously uncouple their saving products, such as term deposits (TDs) and savings accounts, and their lending products, such as fixed and variable home loans.
Doing so would get us out of this zero-sum game where an interest rate cut by the Reserve Bank (RBA) means rates are lower for home loans without pushing down rates for TDs. As it is, home loans and TDs are strange bedfellows. Where one goes, the other one follows.
You could argue that a small arbitrage is at play. Home loan repayments currently range between 5%-8%pa, while TDs sit between 3%-5%pa.
To decide where you should put your money, you have to choose between higher savings or convenience. Easy calculations will show you that paying down your home loan is the winner because of the rate differential, but repayments aren't as liquid as TDs unless you're using an offset account.
Either way, keep your options open and never just settle for your existing bank. After three interest rate cuts since February, shopping around for the bank with the lowest rates for home loans and the highest rates for term deposits is a must.
Seniors should ask about TDs designed for pensioners, while homeowners or investment property owners should make it a habit to refinance at least every two years.
Last year, total home loan debt was $2.3 trillion with the average home loan repayment sitting at $25,600 per year. If you're home loan rate is above 6% or your savings rate is below 3%, there's a high chance you can find a better deal elsewhere.
Where I would invest $10k
Last year, Australia hit a new record in the electric vehicles (EVs) market. With more than 100,000 EVs sold in 2024 and new market entrants offering EVs at cheaper prices this year, we could be in the fast lane to the EV industry forecasts of a million EVs on the road by 2027.
That's not to say that EVs will outnumber other cars anytime soon. Not by a long shot, but I can't imagine a Gen Z, Gen Alpha or Gen Beta buying anything other than an EV if prices keep going down.
Car-sharing Uber already has a net-zero goal by 2040, supporting its fleet drivers to drive EVs.
Not for the faint-hearted because there are risks attached, but I would put my $10k on ETFs that offer exposure to EV and EV-related companies.
WHERE TO INVEST $10K: 13 questions you need to ask
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