I’ve been working and saving money for years, and I think I should probably invest it. I’m pretty sure that investment property is the right move, but there are a few things I’m not sure about and would appreciate some advice on.
So, I’ve been working for a while now but generally live fairly frugally so I’ve just been putting my savings aside in term deposits. I don't have any dependants, and rent fairly cheaply. I live in Australia so the term deposit rate at the moment is ~ 5.4%. I currently have ~$130,000 sitting in the bank and it seems it would be wiser to start investing it elsewhere. Ideally, this investment would provide a modest cashflow as well as seeing some capital growth, and be relatively hassle-free. I’m prepared to borrow to purchase something up to $230,000, but reluctant to borrow more than that as I’m anticipating a decent stretch (at least a year) without employment in the next 2-4 years.
Here’s what I’ve looked into so far:
Student accommodation – I could buy a student apartment in a capital city for ~$150k, and they appear to give roughly 7% return after outgoings. That’s great for cashflow, but I’m told they’re generally not a good investment because they’re hard to resell and rarely show capital growth. How true is that?
Serviced apartments – similar to student accommodation, and give a reliable 6.5% return with very little hassle and guaranteed tenancy. However, it appears they have very little capital growth too.
A small residential unit/apartment – probably more maintenance involved, and a lower return (roughly 4-5%?), but I guess it’d have more chance of capital growth?
I’m hesitant about shares, because I simply don’t know that much about them. I looked into index funds, but there seems to be a bit of volatility there, even over a ~10 year period (like here
), so that doesn’t seem like a great idea.
This is the first time I’ve ever really looked into investing, and the amount of information and material out there is pretty intimidating. I’m leaning towards the serviced apartment thing because it seems the safest with the least hassle, but I’m far from certain about that. I’m planning to talk to a financial advisor as well, but even then I’m not sure how to go about finding the right person.
I guess the question is: do you have any experience with investing in real estate? Any advice to offer on the things I mentioned above? Or, more broadly, if you wanted a bit of cashflow and some capital growth for $150 – 200k, what would you be looking into?
PS – posting from a sock puppet so I can answer follow-up questions if necessary.