Saving To Buy A Home?
Accumulating enough funds for a home loan deposit these days is a big challenge…So it’s important to make sure your money is working just as hard as you are!
With interest rates so low at present, savings growth will be slow at best. But realistically with inflation at 3%, it means your savings are going backwards, making saving for a home loan deposit too long!
Realistically, how long does it take to save for a house deposit?
Recent analysis[1] revealed it takes an average of 8 years to save for a deposit to buy a home in Sydney, 7.5 years in Melbourne and just over 5 years in Brisbane, assuming you’re purchasing a median priced home and that you receive the average weekly household income.
In the most expensive suburb in our fair land on the average income, it could take up to 18 years to save a deposit!
Surely there’s a better way…
Absolutely there is!
Investors and savers alike often turn to the share market to achieve a better return.
Investing in ASX-listed shares or options, increases your exposure to potentially higher long-term returns compared to money sitting in a bank. The higher return achieved by investing in shares or options could in turn reduce the amount of time it takes to save for your home deposit and bring your home ownership goal to fruition in a shorter period[2].
Here’s an example
Westpac Bank shares (ASX:WBC) are currently paying a dividend return of around 6.5%. Which is 6.2% higher than your money sitting in a WBC Savings account. So, by simply buying Westpac shares, rather than leaving your money in a Westpac bank account, instantly increases your returns.
But investing in a single share can of course be risky, and how do you pick the share that’s right for you?
Ideally diversifying your investments, is the best-case scenario i.e., not putting all of your eggs in the 1 basket. Often achieved by looking at the model portfolio’s that investment firms, such as ours, spend their daily blood, sweat & tears trying to get right. Which ultimately removes the guess work for you, in terms of individual stock & sector selection.
Whilst iInvest never advocate that we get it right all the time, we sure are committed to getting it right most of the time! Please contact us for our returns over the last financial year and we would be more than happy to talk to you about that and your needs.
[1] Finder.com
[2] Keep in mind that past performance is never a guarantee of future performance and share market investments will always go up and down. However with an average return of around 9% in the share market over the last 30 odd years, better returns are achievable via the share market when compared to the bank savings account where you money is most likely currently “sitting” over the longer term.
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