I’m 24 and just inherited $300,000. Should I clear my HECS, or invest it?
I am 24 years old and I recently inherited $300,000 from my father. I owe $130,000 in HECS debt and will be starting a $100,000 job next year. What is the best way to invest an inheritance, given my debt and income situation?
Given that the interest rate charged is only the inflation rate, which is currently below 3 per cent, I wouldn’t be in any rush to pay off your HECS debt.
Deciding where to place your legacy when you’re young can be a difficult decision.Credit: Simon Letch
What is needed to answer your question is that your goals are clear. This is because time frame plays an important role in risk management. If your goal is to buy a house within the next year or two, for example, then the most appropriate investment will probably be a high-interest cash account.
But maybe you’ve already taken care of your housing and instead want to invest that money for the long term to provide options in the future. If that were your goal, then a growth-oriented investment portfolio would probably be the way to go.
You can potentially automate monthly additions when you start your new job; This is a great way to gain wealth.
Considering your age, I wouldn’t recommend increasing your pension. You lose access to your money for a long time. There may be an exception if you plan to use the First Home Super Saver program.
Hi Paul, I am 62 years old and will retire in three years. I want to buy a property to live in and I can afford a two-bedroom flat. But if I borrow a few hundred grand, I can buy a three-bedroom townhouse, maybe even a tiny house. If I had resorted to this route, I would have taken out a loan from my retirement and paid off the loan after retirement. My super balance in retirement would then be around $450,000.
Is it better to buy a better property and have less super property, or try to keep as much super property in the kitty as possible and settle for a smaller property?
You need income when you retire, so I would think the best approach would be to maintain as much of the pension as possible. It will therefore mean buying cheaper property.
