# Saving for a home and stock investing on the side



## ENP (10 May 2011)

I'm saving up for my first home with my partner. We both have around 20k saved up each and over the next 2 years hope to get to the 40-50k mark each. It is building up nicely in safe, low returning bank account and term deposits. As we are building up towards a goal and don't want to lose capital.

However, with all the investment knowledge I'm now gaining about stocks etc, I see some good buys and want to act on a few of them. But then I don't want to use house deposit savings to risk it.

Has anyone else come across the same dilemma? Did you use some house deposit money? Or did you put aside a separate amount each week to use strictly as your house deposit money?

Also what is the minimum amount you would invest with, so you didn't get big commissions taken from you buying stocks? 

Any help would be great, thanks.


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## kingcarmleo (10 May 2011)

ENP said:


> I'm saving up for my first home with my partner. We both have around 20k saved up each and over the next 2 years hope to get to the 40-50k mark each. It is building up nicely in safe, low returning bank account and term deposits. As we are building up towards a goal and don't want to lose capital.
> 
> However, with all the investment knowledge I'm now gaining about stocks etc, I see some good buys and want to act on a few of them. But then I don't want to use house deposit savings to risk it.
> 
> ...




It' a tough decision but personally I believe one should worry about reducing as much as of their mortgage as they can before they start investing in other products. That is  just my opinion, I'd say a lot depends on the person and their financial situation.


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## dumadiscount (10 May 2011)

Saving for a new home and costs of filling it with new stuff is quite hard already. Concentrate and that and settling in once you've bought it, then think about shares. The share market will always be there and your saving habits will come in handy. in tshe meantime just keep reading and learning more abouts shares!


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## explod (10 May 2011)

At the moment (markets are looking very shaky)I would keep the money in cash, I think you can get termed bank rates around 6% and this type of compunding builds up a lot over a couple of years.   

Property prices at best have levelled out and many would say will fall in value under the current economic outlook.

I would hit the books on economics, start with "Rich Dad Poor Dad",  and learn about the stock market from reading appropriate subjects on the ASF forums.  From there you will learn and involve yourself with the reasoning behind my first couple of statements.  Maybe a little advanced for you yet but the current ASF book of the month by Guppy is one for the shelf and it will get you seeking your own answers regarding the powers of charts and financial analysis.

It may then be possible for you to have a very much bigger amount to put to your first home than you had imagined and it will certainly change you outlook on life, for the better in my view.


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## burglar (10 May 2011)

You've just jogged my memory.
I invested in my first house in 1978.
Bought my first shares in 1980.
ECM East Coast 1,000 @ $0.19 plus $25 brokerage
... (for the nice man at the full-service telephone broker.)
Later that same year:
Sold ECM East Coast 1,000 @ $0.70 plus $35 brokerage.
Proceeds of sale went into a new front fence
for aforementioned property (value adding).

Lil' Johnny Howard was Minister for Housing around that time!


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## ENP (11 May 2011)

So you all don't invest it stocks whilst saving for a home, don't invest in stocks whilst paying off the mortgage?

So only invest after the mortgage is fully paid off?


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## investorpaul (11 May 2011)

ENP

I started investing in shares years ago, I built up a decent holding of Blue Chips which forms my "core" investment in shares.

I got married last year and am about to turn 22. Both my wife and I want to buy a house in the next 5 or so years and currently save a portion of our income each week.

As my knowledge of the stockmarket has grown I have a "secondary" portfolio of higher risk/high growth stocks and a sum of cash that I trade.

In my opinion you should have two saving accounts one for your home and one for shares. When starting in shares only risk the money you are happy to lose. As time progresses and as you get more trades under your belt you will learn alot.


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## explod (11 May 2011)

ENP said:


> So you all don't invest it stocks whilst saving for a home, don't invest in stocks whilst paying off the mortgage?
> 
> So only invest after the mortgage is fully paid off?




Not too sure that was inferred across the board.  I would say that the very best scenario would be to invest wisely and well whilst consolidating your finances to buy a home.

It may be that with some practical financial learning you may even put off buying a home further down the track.   Some are making more from trading than by having money tied up in a home.  If with, for example, you can trade and make 30% a year  $100,000 and rent only costs you $15,000 (which of course incur no other costs like a home) then maybe that could be much better for awhile.

We are all tentative in giving clear leads because most of us know that to succeed you need to do your own yards in learning to, not only grow your wealth, but to maximise every opportunity and then hang onto it.   The last is a very hard bit too as a little success can often lead one off the track too.

Go down to your local library and borrow "Rich Dad Poor Dad" by Robert Kyosaki, you could read it over in a few days and then come back with further comments.


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## Julia (11 May 2011)

ENP said:


> So you all don't invest it stocks whilst saving for a home



If you were to put all your savings which are ultimately intended as a deposit on your home into the market, how would you manage if another GFC occurred?

i.e.  do you recall that many investors who failed to take action to protect their capital lost half of that capital and even now - 3 years later - many portfolios are still nowhere near their pre-GFC level?


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## So_Cynical (11 May 2011)

ENP said:


> So you all don't invest it stocks whilst saving for a home, don't invest in stocks whilst paying off the mortgage?
> 
> So only invest after the mortgage is fully paid off?




Some people have sold their houses and have everything in the stock market...all depends on your outlook, ambitions and past circumstances.


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## Intrinsic Value (12 May 2011)

Julia said:


> If you were to put all your savings which are ultimately intended as a deposit on your home into the market, how would you manage if another GFC occurred?
> 
> i.e.  do you recall that many investors who failed to take action to protect their capital lost half of that capital and even now - 3 years later - many portfolios are still nowhere near their pre-GFC level?




It all depends on how good an investor you are doesn't it?

If you can get high gains then use your home deposit to invest but if you are like 90 percent of people then you would be better off buying your house and worrying about other investments later on down the track.


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## explod (12 May 2011)

When we speak of becoming financially literate we expect at the end of proper study to have a good idea of when for example another Global Finncial Crisis may hit.

I did not know when the last GFC was going to occur but I was very aware by june 08 that it was going on.  The down trend began about August of 07.   So for the wary there is usually plenty of signals and time to be out.

GFC 3, not there yet but I think a lot of signs now have many of us on our toes.   As traders the volatility is very good.  So it all depends.  No ones advice, if they could give it, fits all, so you do have to DYOR.


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## ENP (12 May 2011)

So the toss up really is...

Peace of mind that I can buy a house in x years time with x amount per week constant savings into a bank account.

vs

A higher, more exciting return on my money to get into my house 6-12 months faster with high returns but also the risk of waiting another 12-24 months if the market crashes whilst saving up.


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## damien275x (18 May 2011)

Why do people say things like 'if' a GFC will occur" . as if to say you have no idea, and a GFC is just a random bad event like drawing a SKIP card when playing Uno? If you watch what is happening around the world - looking at the trends, conduction your own research, and drawing your own conclusions, then investing isn't AS risky. Yeah to an extent it is, but there is risk in everything you do. 

What kind of advice is 'invest everything you are prepared to lose' - that's retarded. Do your research first so you don't lose. Have an out. Follow the trend. Or at least swing the odds in your favour considerably. Yes, there's always the unknown, but to me the average investor is an idiot and just looks at ups and downs and doesn't ask 'why' That isnt investing, that's gambling! Leave your money in a term deposit until you know what's going on and what you are doing, don't leave it in the hands of somebody else

Greece Bailouts
China Woes
India Inflation Woes
Australia tied directly to China
USA printing money like a fool
All this DEBT that is still there

Read read and then read more.


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## sinner (18 May 2011)

OP, my own plan went like so:

1. 1 years worth of living expenses saved - no point trying to grow anything without a base.
2. Start saving for your goal: land, house, boat, whatever.
3. Invest the returns on savings in higher risk strategies. That way your nominal savings are never at risk and you can continue to grow assets in the form of shares/options in shares.

If a GFC occurs, I am under no duress to exit any accumulated assets. I have gold in case the banks fail.


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## tothemax6 (18 May 2011)

ENP said:


> So you all don't invest it stocks whilst saving for a home, don't invest in stocks whilst paying off the mortgage?
> 
> So only invest after the mortgage is fully paid off?



Personally I would want to be saving a very large deposit before buying a house, and being sure I know that housing is at a good price. Debt on a house is very expensive, half of the repayments are effectively spent on paying the bank interest over the life of the loan. If there is a large differential between rent payments and mortgage repayments, it can be wise just to save the difference.
Regarding stocks during the repayment of the mortage, it really depends on whether or not you can make a return above the mortgage interest rate. If not, the money should be spent paying off the mortgage. This return rate will of course depend on your performance in choosing what and when to buy.


damien275x said:


> Greece Bailouts
> China Woes
> India Inflation Woes
> Australia tied directly to China
> ...



My sentiments exactly. Probably throw in there 'UK economy also effed'.


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## Intrinsic Value (19 May 2011)

tothemax6 said:


> Personally I would want to be saving a very large deposit before buying a house, and being sure I know that housing is at a good price. Debt on a house is very expensive, half of the repayments are effectively spent on paying the bank interest over the life of the loan. If there is a large differential between rent payments and mortgage repayments, it can be wise just to save the difference.
> Regarding stocks during the repayment of the mortage, it really depends on whether or not you can make a return above the mortgage interest rate. If not, the money should be spent paying off the mortgage. This return rate will of course depend on your performance in choosing what and when to buy.
> 
> My sentiments exactly. Probably throw in there 'UK economy also effed'.




Yeah the problem hasn't gone away. The debt is all still there and old habits haven't changed. 

In fact there are quite a few analysts who are not saying if a GFC2 but are saying when the GFC2.

Further if you believe this is the case then you should leave a large chunk of your capital in cash garnering 6percent and wait for all the good buying opportunities when the crash does occur. That is the time to buy good businesses at a huge discount to their true value.


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## damien275x (19 May 2011)

It's not really a GFC 2.

We are just building and proping up the economies in the eye of the cyclone.


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