Have you seen the price of houses lately? Trust me…they are not cheap. Do you wonder then will you ever be able to save enough to buy your first home with all your other competing financial obligations?

What if I told you, you could get that deposit together for your first home through investing, much quicker than saving. Saving in the bank account will take you longer to get the home deposit because chances are your returns are below the inflation rate, so when you finally reach your savings target the deposit amount you need will be higher, which means now you need more money. Will the cycle end? The good news is, it can, but you will need to modify your approach, by investing. 

There are higher risks with going the investing route, but there are greater returns to be made. To trick is to be guided by the best practices and techniques that persons have been using for years, to ensure you minimize the possibility of losses. 

Let me share a real example with you. A friend of mine wanted to buy her first home, and it was taking her ‘forever’ to get the deposit together. She had J$1M saved which was not enough, so she decided to take that money and invest it in FESCO’s IPO, which was J$0.80 when it was listed and today (April 19, 2022) it is now J$6.13.

She would have made 7.6X on her money, which would be J$7,662,500. That is a big return. Wait! Remember though we spoke about best practices, she did not leave all her money in stock, when her money doubled, she took off her gains, which was her initial investment, selling at J$1.60, and left the rest of it. She took her gains because she wanted to minimize her risk. She placed the gains in a high-interest savings account. The high-interest savings account didn’t give her the returns that the stock market did; however, it provided a low-risk savings option and higher returns than a regular savings account. 

Ok back to the example, remember that additional J$1,000,000 which she made in FESCO, which was pure returns from the stock price appreciation? Well, she let it stay in the stock and consistently took 30% gains, as the stock price increased, and added it to her high-interest rate savings account. This strategy worked and the best part is, that my friend is now a homeowner. Homeownership goal check, now onto the next milestone. 

Now, before you start investing here are a few questions to ask yourself:

  • How much money should I invest?
  • What type of investment should I invest in? Unit Trusts, ETFs, Stocks, Bonds, Commodities, etc.
  • How long should I invest?
  • How much money do I want to earn from my investment? What is your investment target? 

Join us in the MoneySquad to learn more about investing strategies that can help you achieve your goal sooner.

BUILD YOUR MONEY KNOWLEDGE TIP:

High-Interest Savings Account offers higher interest rates than regular savings accounts while offering you a low risk. Certificate of Deposits (CDs) is a great example high-interest savings account.   

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