What to do with cash for 12 months

Discussion in 'Money Management & Banking' started by nitro-nige, 7th Jun, 2007.

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  1. nitro-nige

    nitro-nige Active Member

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    Melbourne
    Hi

    My wife and I are looking and buying our first home in about 12 months. From there I'd like to start using the equity to build an investment portfolio, based on the living on equity model.

    My question is;
    What is the best thing to do with our money for the next 12 months? We don't have enough deposit to buy now but are adding to the amount regularly.

    Should we just leave it in the bank or is there a better option?

    Cheers Nige.
     
    nitro-nige, 7th Jun, 2007
    #1
  2. Jacque

    Jacque Jacque Parker Premium Member

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    This is just my opinion, but if I was saving for my PPOR I'd be wanting to protect that saved capital as much as possible by going for something low risk, that I could also have fast access to. Why not consider a short term deposit that is able to be contributed to?

    I'm sure others will come up with more risk-averse methods of saving, however, that you may like to consider :)

    It all depends on your risk profile. Best of luck with the PPOR purchase!!
     
    Jacque, 7th Jun, 2007
    #2
  3. Simon Hampel

    Simon Hampel Founder Staff Member

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    For a short term timeframe like 12 months, my suggestion is to put it in a high interest savings account like ING Direct (for example) ... 6% interest or better if you shop around for similar accounts.

    I don't suggest looking at shares/funds unless you have a longer timeframe ... short term market fluctuations can have a negative impact on your capital value at the time you may need that cash for your deposit.
     
    Simon Hampel, 7th Jun, 2007
    #3
  4. Nigel Ward

    Nigel Ward Well-Known Member

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    Just cause third time's a charm, I endorse what Sim and Jacque have said.

    If you're a bit more elastic in your timeframe then perhaps you could look at shares... but with a timeframe under 3-5 years you shouldn't put your capital at risk like that if you DEFINITELY need it.

    Perhaps you could look at:

    a) having a core holding of cash in one of the great high yielding on-line accounts or depending how much you've got even look into say a 12 month term deposit - altho that will incur break fees if you want your cash early...

    AND

    b) putting a small amount initial plus perhaps a small regular contribution into initially a well diversified managed fund, LIC or ETF (homework reading for you is to figure out what those two acronymns means ;) :D ).

    That way you protect MOST of your cash but expose a small portion of it to some potentially higher growth PLUS increase your investment experience - nothing teaches like having some skin in the game!

    Just another option to consider.

    Cheers
    N

    ps. welcome on board. Great to have another Nigel around the place!
     
    Nigel Ward, 7th Jun, 2007
    #4
  5. nitro-nige

    nitro-nige Active Member

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    Our money is getting 6.10% on call on the moment.
    We could get 6.30% with a 12 month term deposit.

    I was interested in alternatives.
    Thanks for the homework Nigel !!
    Do I have to post my answers here or can I just PM you to save personal embarrassment?
     
    nitro-nige, 8th Jun, 2007
    #5
  6. Andrew Allen

    Andrew Allen Well-Known Member Business Member

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    How about buying the home now with a 12-18 month settlement?

    Or an option to purchase in 1 year. Just an idea for thought.
     
    Andrew Allen, 8th Jun, 2007
    #6
  7. arandomperson

    arandomperson Member

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    We have a portion of our saved deposit in BankWest telenet saver at 6.8% interest:
    BankWest - Bank of Western Australia Ltd.
    The rest is in a mix of Hunter Hall and Vanguard managed funds via ETRADE.. these returned better than the bank but more risk and volatility (for example the HH plunged down shortly after I first got them, but then recovered).. plus there is the timing of the distributions.. we've had them most of them for well more than a year but I wouldn't go that way for a year or less.
     
    Last edited by a moderator: 10th Jun, 2007
    arandomperson, 9th Jun, 2007
    #7
  8. spider

    spider Well-Known Member

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    Savings


    My wife and I salary sacrifice 100percent of our wages into Super and live off some funds we have in Members Equity....

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    spider, 10th Jun, 2007
    #8