I am in my mid 30s and I have $50K that is currently in a line of credit account, but I would like to withdraw and invest it. Where is the best place to invest this money and what would be the best time to do this given the stock market is currently performing strongly?
Lana in Nerang, Qld
Top answer provided by:
Thank you for your question.
What is the best place to invest this money?
Regarding the “best place” to invest your funds, this can be a tricky one to predict as different asset classes (cash, fixed interest, property and shares) perform differently depending on the economic landscape.
Before considering where is the “best place” to invest, it is worth considering what your goals and timeframe are. i.e. are you investing for capital growth, income, or do you need access to liquid cash in case of an emergency. What are you plans for these funds? This will help assess what the outcome you will need and match that with the required returns you need to meet your goals.
Then the next questions to ask yourself is, how much risk am I willing to accept? Generally speaking, the higher the expected return, the more risk you will need to be willing to accept and longer time horizon required.
Once you have an understanding of the above questions, then you would consider the different asset classes such as Australian Shares, International Shares, Property, Infrastructure, Fixed interest and Cash.
Please keep in mind with using a line of credit, leverage is a double edge sword. Your gains are magnified, but any losses are also be magnified.
What is the best time to invest?
If we could easily time the markets every investor would retire early and be sitting on the beach having a beer. However, this is not the case. Hence when investing it would be wise to utilise the dollar-cost averaging investment strategy (particularly more so in a volatile market such as in 2020) – you divide up the $50,000 to be invested over a period of time. You are actually already doing it through your superannuation fund (indirectly via the regular concessional contributions being made by your employer).
As there are a few moving parts for you to consider, we would recommend seeking advice from a licensed financial adviser to get an understanding of your goals and make suitable investment recommendations tailored to you.
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.