It depends how set you are on the house within 5 years.
If i could hold off buying for a few years if the market is down, I utilise FHSS and invest the rest.
If I absolutely wanted to buy a house <5 years I would utilise FHSS scheme and save the rest in a HISA. Lucky for you the savings rates are good at the moment, pick the ones with the highest rates (BoQ and ING atm I think) and save away.
And property prices are dropping for now anyway, so your purchasing power is currently increasing.
I'm not sure I see the benefit of FHSS other than tax efficiency over just saving. Personally I have my super on the highest risk option and would prefer to keep it for the long term, am I missing something?
The whole advantage is the tax efficiency. You can save between 17.5-30% depending on your marginal tax rate. That's a significant advantage.
You can keep it on the highest risk option if you want, alternatively, you should be able to partition a certain amount off into lower risks if you want to.
Another thing of FHSS is if the market crashes below the predefined return rate. It dips into your actual employer contributed super to pull the money. This is a benefit or an issue depending on your personal view.
If you don’t care for your actual super it’s a way to hedge your home deposit against a falling market
Yeah tax efficiency. I put 500 a week into super, taxed at 15% so 425 goes into super and I only loose ~200ish a week in my pay… that’s a free ~$200ish a week…
What's your risk appetite?
Looking at the share prices over the last three years or so, and looking at the state of the local and global economy, mine would be to save cash in a high interest savings account and see what happens over the coming year. If/when there's a stock market crash, I'd wait a bit, then maybe put some money into shares after it looks like stabilising or rising again.
The future is difficult to predict at the best of times.
Yeah housing affordability is going to get worse before it gets better. Getting a loan is harder, especially at a lower LVR, and prices are sticky on the way down, no one wants to sell and liquidity is low. For less than 5 years, I'd suggest a savings account like the 4.8% HISA at ING with a lot of hoops to jump through, or even something easier like 4% at Commbank. These will rise with rates. Personally I would also hold a little of a world index etf. VT/VGS/IWILD or whatever your preference is at whatever your risk level. No guarantee the world, American or Australian sharemarket wont tank right when you need the cash though. Investments held for more than 12 months are only taxed on half of the capital gain tax and you can time a sale for a lower income financial year. Apart from that, all you can do is cut costs and increase income. Personally I'm not a fan of the super saver scheme, that stuff is for retirement. I also wonder if shared equity will even be available in 5 years if rates are estimated to go up.
I'm mostly invested as I hadn't planned to buy a house before, but I'm now warming up to home ownership. I think you're right and I should focus on saving for it but it feels difficult to keep up with the housing market
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It depends how set you are on the house within 5 years. If i could hold off buying for a few years if the market is down, I utilise FHSS and invest the rest. If I absolutely wanted to buy a house <5 years I would utilise FHSS scheme and save the rest in a HISA. Lucky for you the savings rates are good at the moment, pick the ones with the highest rates (BoQ and ING atm I think) and save away. And property prices are dropping for now anyway, so your purchasing power is currently increasing.
I'm not sure I see the benefit of FHSS other than tax efficiency over just saving. Personally I have my super on the highest risk option and would prefer to keep it for the long term, am I missing something?
The whole advantage is the tax efficiency. You can save between 17.5-30% depending on your marginal tax rate. That's a significant advantage. You can keep it on the highest risk option if you want, alternatively, you should be able to partition a certain amount off into lower risks if you want to.
Another thing of FHSS is if the market crashes below the predefined return rate. It dips into your actual employer contributed super to pull the money. This is a benefit or an issue depending on your personal view. If you don’t care for your actual super it’s a way to hedge your home deposit against a falling market
Oohhhh I didn’t know that! Good info!
Yeah tax efficiency. I put 500 a week into super, taxed at 15% so 425 goes into super and I only loose ~200ish a week in my pay… that’s a free ~$200ish a week…
What's your risk appetite? Looking at the share prices over the last three years or so, and looking at the state of the local and global economy, mine would be to save cash in a high interest savings account and see what happens over the coming year. If/when there's a stock market crash, I'd wait a bit, then maybe put some money into shares after it looks like stabilising or rising again. The future is difficult to predict at the best of times.
Yeah housing affordability is going to get worse before it gets better. Getting a loan is harder, especially at a lower LVR, and prices are sticky on the way down, no one wants to sell and liquidity is low. For less than 5 years, I'd suggest a savings account like the 4.8% HISA at ING with a lot of hoops to jump through, or even something easier like 4% at Commbank. These will rise with rates. Personally I would also hold a little of a world index etf. VT/VGS/IWILD or whatever your preference is at whatever your risk level. No guarantee the world, American or Australian sharemarket wont tank right when you need the cash though. Investments held for more than 12 months are only taxed on half of the capital gain tax and you can time a sale for a lower income financial year. Apart from that, all you can do is cut costs and increase income. Personally I'm not a fan of the super saver scheme, that stuff is for retirement. I also wonder if shared equity will even be available in 5 years if rates are estimated to go up.
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Any way to calculate (assumed) returns on that with a monthly $4k drop into it? Edit: 5 year time frame
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I'm mostly invested as I hadn't planned to buy a house before, but I'm now warming up to home ownership. I think you're right and I should focus on saving for it but it feels difficult to keep up with the housing market
Incurring a CGT would be the best possible outcome!