Girls That Invest: How to invest your home savings nest egg
How to save, secure and grow your home deposit with Girls That Invest Co-Founder, Simran Kaur.
28 April 2023
Girls That Invest is the brainchild of two founders, Simran (Sim) Kaur and Sonya Gupthan, best friends and millennial investors. They found the world of investing overcomplicated and felt it had barriers for women and minorities.
So, they began what is now an award-winning global investing podcast to help people gain the confidence they need to level up and achieve the financial freedom they deserve.
We asked Sim how to save your deposit and then protect and grow those precious savings.
How can I start saving for a house deposit?
Sim: Create a budget and stick to it: Before you can start saving, it's important to understand where your money is going each month. Create a budget that includes all of your income and expenses, and look for areas where you can cut back on spending. This could mean reducing your discretionary spending or finding ways to lower your fixed expenses, like switching to a cheaper cell phone plan or cancelling subscription services you don't use. Once you have a budget in place, stick to it as closely as possible to maximise your savings. Do some research to see what support is available for first-home buyers in your area and whether you qualify for it.
Any other tips at this early stage?
Sim: Also, open a separate savings account: one of the easiest ways to save for a house deposit is to open a separate savings account specifically for that purpose. This will help you keep your savings separate from your regular spending money and make it easier to track your progress towards your savings goal. Look for a high-interest savings account that pays a competitive rate of interest, and set up automatic transfers from your checking account so that a portion of your salary is automatically deposited into your savings account each month.
What sort of investments can future homebuyers put their hard-earned house savings into?
Sim: When saving for a house deposit, it's generally recommended to invest in low-risk options that offer a stable return, such as:
- High-yield savings accounts: these can be a great option for saving for a house deposit. They typically offer a higher interest rate than traditional savings accounts, which can help your savings grow faster.
- Term deposits: these are another low-risk investment option that can provide a stable return. With a term deposit (TD), you put in a fixed amount of money for a set period of time, and in exchange, the bank pays you a fixed interest rate. The longer the term of the TD, the higher the interest rate you can typically earn.
- Bonds: these are considered among some of the safest investment options available. While they typically offer a lower rate of return than other investment options, they can be a good option for investors who want a low-risk investment with a guaranteed return.
Simran Kaur, Co-Founder of Girls That Invest
What do you think of investing in cryptocurrency with some of your house deposit savings?
Sim: Cryptocurrency is a volatile security and comes with a significant degree of risk as an investment choice. Generally, it would be recommended to have a measured exposure to it in any portfolio, and extreme care should be taken when considering investing funds that will be required in the short term, such as house deposit savings.
If you’re planning to invest for, say three years, are there share portfolios homebuyers might consider?
Sim: Investing risks are lowered when investing for the long term. Those saving for a house deposit should weigh the risks of investing their house deposit savings extremely carefully if required in the short term (less than five years).
Savers may wish to consult a financial advisor who will be able to guide them on investing decisions based on their personal financial position and risk appetite.
Should house savers find a financial adviser to help them with their saving goals?
Sim: It's entirely possible to do it themselves, but they may want to consult with a financial advisor if their saving goals are more complex. We recommend a fee-based financial advisor, as opposed to a commission-based one. That way, the advisor is working only for you.
What if your partner is a conservative investor and you’re more of a risk taker?
Sim: Couples may prefer to put aside money for riskier investments for the long term, and reserve the conservative investing for the short term.
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