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Hewison Insights
Young Accumulator

The burning question of the young accumulator

Andrew Hewison
Managing Director
27 Oct 2014

I recently returned from a two-week holiday in Bali with close friends. Our group ranged in age from early 30’s to late 30’s. The trip was filled with lazy days by the pool and some extended car trips for sightseeing.

During this holiday, my friends took the opportunity to ask some burning questions around their personal financial affairs. One of these I’d like to share with you –

“We have a lump sum of money with ongoing savings and want to buy a house in the next 12-18 months. What do we do with the money?”

My advice:

Given the low rates of return on term deposits, the temptation may be to join in on recent gains in the sharemarket. I would not recommend this. Instead, I would argue fixed interest alternatives are still the most appropriate option.

A period of 12-18 months is not a long time for growth investments. If the market falls, it may not bounce back within your time frame. Hence, you may have less than when you started when the time comes to purchase a property.

Fixed interest investments may not be returning a great deal at the moment, but your asset is safe and you are assured of maintaining your capital.

Over the longer-term, once you have purchased your property, you should aim to repay the mortgage as quickly as possible. Once you have equity in your home, consider re-drawing it for a longer term (five years’ plus) investment into growth assets. The money you re-draw on your mortgage will be tax deductible as it is for investment purposes, as opposed to your mortgage interest, which is not deductible.   

Please contact us if you would like further information on your current investment strategy.

The information contained in this blog is general in nature and is not intended as personal advice.  Please obtain advice from your Financial Adviser before acting upon this information


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.