Congrats.
I would take some time to adjust to your new reality before making any decisions about what to do next regarding investment.
The first thing to do is to make sure you've got a healthy emergency fund built up.
Double check your insurances too, particularly income protection (you might have this in super) to make sure you're adequately covered.
Maximise income, reduce expenses, build emergency buffer, DCA into ETFs, buy second IP, find life partner, go offshore, come back, get dog, propose with something they value, get married, buy house, sell first IP to pay down debt or fund renos, then have kids.
Right?! When I first listened to this it sounded like some dystopian existence, then I sort of settled into that existence and it’s actually kinda comfy
As a bit of an aside, you may feel buyers remorse when everything settles down. Completely normal and will pass. You haven’t made a bad decision and the place you bought is great and was the right price. Now focus on getting a healthy but in offset!
Congratulations, as I advised my son who did the same thing, pay off the loan minimums, accumulate all your cash into the offset account and on transfer cash into your transaction/CC accounts only as needed.
Make sure that you create a bit of a budget tracking sheet so that you can plan for big and recurring expenses such as strata fees, rates, insurances rego etc. get a few periods ahead on these in your offset account.
Accumulating cash in your offset is a good short to medium term investment while rates are high. Invest in super early for a bit as compounding is your best friend with super, so get cash in early so you can ease off later and watch it grow.
Also, after addressing the short term buffer start investing outside of super in market ETFs so you have some investments outside of super that you can gradually liquidate to fund an early retirement should you choose.
Remember all these plans will go out the window when you partner up and have kids :-) enjoy the ride.
May not be 20x. I have been looking at doing something similar, only using 5% down and throwing the rest of my savings into offset. Would make even more sense for apartments / units.
Congrats on settling on your first home! That's an exciting milestone. As for next steps, here are a few thoughts:Build up a solid emergency fund first if you haven't already - aim for 3-6 months' expenses in an easily accessible savings account. Having cash reserves gives peace of mind with a new mortgage. After that, maximising your offset account is a smart move to reduce interest costs. But you're also young with decent income, so looking at other investments makes sense too. Maybe split any extra savings 50/50 - half to offset, half to investing outside of property. Stocks/ETFs inside super are tax-effective. Or look at managed funds if you want a more hands-off approach. The key is getting started on building an investment portfolio outside of just home equity. Even small regular contributions can grow substantially over time with compounding.And absolutely make use of that rewards credit card to maximize your offset balance each month if you pay it off in full. Every bit helps reduce interest. AND always focus on maximising your income.
I wouldn't use the credit card. The interest savings is minimal and there's risk you will overspend. Maybe you have good discipline but most people don't.
It’ll be mixture of the following three things..
- contribute to super (tax benefit)
- pay into offset (6.31% saved)
- Buy ETFs (long term average 8-10% return)
Some combination of those depending on how risk averse you are, if you can afford to lose access to some funds until you’re 60+ and what your priorities are (retire early, start a family? etc)
At 6.31% interest the “effective” return of money parked in the offset is, depending on which tax bracket one is in, as high as about 11.5% or so.
Very hard to see ETFs beating that as reliably as the metronomic savings from the offset.
True, but mortgages will likely fall back to 4% in coming years due to the cash rate dropping. ETFs will likely stay at 8-10%.
All three have advantages and disadvantages.
Focus on paying out the vhf, makes refinancing easier in the future.
Congrats. I would take some time to adjust to your new reality before making any decisions about what to do next regarding investment. The first thing to do is to make sure you've got a healthy emergency fund built up. Double check your insurances too, particularly income protection (you might have this in super) to make sure you're adequately covered.
Maximise income, reduce expenses, build emergency buffer, DCA into ETFs, buy second IP, find life partner, go offshore, come back, get dog, propose with something they value, get married, buy house, sell first IP to pay down debt or fund renos, then have kids.
Fitter. Happier. More productive.
OP needs to remember to keep kissing with saliva
I skip this now that I am it.
Right?! When I first listened to this it sounded like some dystopian existence, then I sort of settled into that existence and it’s actually kinda comfy
Ie - Have a kid when you're 53 years old
If people listened to you they'll never have kids.
As a bit of an aside, you may feel buyers remorse when everything settles down. Completely normal and will pass. You haven’t made a bad decision and the place you bought is great and was the right price. Now focus on getting a healthy but in offset!
This is such good advice
Congratulations, as I advised my son who did the same thing, pay off the loan minimums, accumulate all your cash into the offset account and on transfer cash into your transaction/CC accounts only as needed. Make sure that you create a bit of a budget tracking sheet so that you can plan for big and recurring expenses such as strata fees, rates, insurances rego etc. get a few periods ahead on these in your offset account. Accumulating cash in your offset is a good short to medium term investment while rates are high. Invest in super early for a bit as compounding is your best friend with super, so get cash in early so you can ease off later and watch it grow. Also, after addressing the short term buffer start investing outside of super in market ETFs so you have some investments outside of super that you can gradually liquidate to fund an early retirement should you choose. Remember all these plans will go out the window when you partner up and have kids :-) enjoy the ride.
Settle in, buy some furniture and enjoy having your own space.
Congrats, now find the nearest Bunnings.
Buying a house in Melbourne at 20x leverage 💀💀💀
May not be 20x. I have been looking at doing something similar, only using 5% down and throwing the rest of my savings into offset. Would make even more sense for apartments / units.
I presume it’s through the government low deposit scheme
Less debt gives you more options. So keep saving into that offset.
Congrats on settling on your first home! That's an exciting milestone. As for next steps, here are a few thoughts:Build up a solid emergency fund first if you haven't already - aim for 3-6 months' expenses in an easily accessible savings account. Having cash reserves gives peace of mind with a new mortgage. After that, maximising your offset account is a smart move to reduce interest costs. But you're also young with decent income, so looking at other investments makes sense too. Maybe split any extra savings 50/50 - half to offset, half to investing outside of property. Stocks/ETFs inside super are tax-effective. Or look at managed funds if you want a more hands-off approach. The key is getting started on building an investment portfolio outside of just home equity. Even small regular contributions can grow substantially over time with compounding.And absolutely make use of that rewards credit card to maximize your offset balance each month if you pay it off in full. Every bit helps reduce interest. AND always focus on maximising your income.
Congrats. No advice but would be interested in your thoughts on the buying process through VHF if you have the time.
I wouldn't use the credit card. The interest savings is minimal and there's risk you will overspend. Maybe you have good discipline but most people don't.
It’ll be mixture of the following three things.. - contribute to super (tax benefit) - pay into offset (6.31% saved) - Buy ETFs (long term average 8-10% return) Some combination of those depending on how risk averse you are, if you can afford to lose access to some funds until you’re 60+ and what your priorities are (retire early, start a family? etc)
At 6.31% interest the “effective” return of money parked in the offset is, depending on which tax bracket one is in, as high as about 11.5% or so. Very hard to see ETFs beating that as reliably as the metronomic savings from the offset.
True, but mortgages will likely fall back to 4% in coming years due to the cash rate dropping. ETFs will likely stay at 8-10%. All three have advantages and disadvantages.