vania-janet/multiturn-rag-retrieval-data huggingface dataset:
The idea you present is not uncommon, many have tried it before.  It would be a great step to find landlords in your area and talk to them about lessons learned.  It might cost you a lunch or cup of coffee but it could be the best investment you make. rent it out for a small profit (hopefully make around 3 - 5k a year in profit) Given the median price of a home is ~220K, and you are investing 44K, you are looking to make between a 6 and 11% profit.  I would not classify this as small in the current interest rate environment. One aspect you are overlooking is risk.  What happens if a furnace breaks, or someone does not pay their rent?  While some may advocate borrowing money to buy rental real estate all reasonable advisers advocate having sufficient reserves to cover emergencies.   Keep in mind that 33% of homes in the US do not have a mortgage and some investment experts advocate only buying rentals with cash. Currently owning rental property is a really good deal for the owners for a variety of reasons.  Markets are cyclical and I bet things will not be as attractive in 10 years or so.   Keep in mind you are borrowing ~220K or whatever you intend to pay.  You are on the hook for that.  A bank may not lend you the money, and even if they do a couple of false steps could leave you in a deep hole.  That should at least give you pause. All that being said, I really like your gumption.  I like your desire and perhaps you should set a goal of owning your first rental property for 5 years from now.  In the mean time study and become educated in the business.  Perhaps get your real estate license.  Perhaps go to work for a property management company to learn the ins and outs of their business.  I would do this even if I had a better paying full time job.
You could look into an index fund or ETF that invests primarily in Real Estate Investment Trusts (REIT's). An REIT is  any corporation, trust or association that acts as an investment agent specializing in real estate and real estate mortgages Many investment firms offer an index fund or ETF like this. For example, Vanguard and Fidelity have funds that invest primarily in real estate markets. You could also invest in a home construction ETF, like iShares' ITB, which invests in companies related to home construction. This ETF includes more companies than just REITs, so for example, Home Depot is included.
I see a lot of comments on reddit from people about how they just bought a house. A lot of people still have a post 2008 bust mindset about the world, ideas such as house values always rise, an education is always worth it, always max out your 401k, etc.
It depends entirely on what you're improving and what you're spending. Taking the kitchen for example, if you're replacing a tired 1960's kitchen with cheap but functional IKEA units and appliances, and you're doing as much of the work as possible yourself, you will definitely see a good return. However if you're spending $50,000 on a Poggenpohl kitchen to be fitted by professionals your ROI is going to be your enjoyment of the kitchen over the years and not financial.
I'm surprised to even hear this question with the current state of devaluation of real estate.  One thing I'll add to the other answers is to make sure you are doing a true apples/apples comparison to other investments when considering real estate. You can't just take subtract the purchase price from the sales price to get your ROI.  Real estate has very heavy carry costs that you need to factor into any ROI calculation including: One more point: A house that you live in shouldn't be considered an investment, but rather an expense. You have to be able to liquidate an investment and collect your return. Unless you plan to move back in with your parents, you are always going to need a place to live so you can never really cash out on that investment, except perhaps by downgrading your lifestyle or a reverse mortgage.
Pretty simple: When is Cash Value Life Insurance a good or bad idea? It is never a good idea. How can life insurance possibly work as investment? It can't.  Just as car, home, or health insurance is not an investment.  Note for counter example providers:  intent to commit insurance fraud is not an investment. Why not live your life so in 15 or 20 years you are debt free, have a nice emergency fund built and have a few 100 thousand in investments?  Then you can self-insure.  If you die with a paid off home, no debt, 20K in a money market, and 550,000 in retirement accounts would your spouse and children be taken care of?
With an appropriate selection within a 401K and if operating expenses are low, you get tax deferred savings and possibly a lower tax bracket for now.  The returns vary of course with market fluctuations but for almost 3 years it has been double digit growth on average.  Some health care sector funds were up over 40% last year.  YMMV.  With stocks and mutual funds that hold them, you also are in a sense betting that people want their corporations to grow and succeed.  Others do most of the work.   Real estate should be part of your savings strategy but understand that they are not kidding when they talk about location.  It can lose value. Tenants tend to have some problem part of the year such that some owners find it necessary to have a paid property manager to buffer from their complaints.  Other owners get hauled into court and sued as slum lords for allegedly not doing basics. Tenants can ruin your property as well.  There is maintenance, repair, replacement, insurance against injury not just property damage, and property taxes.  While some of it might be deductible, not all is.   You may want to consider that there are considerable ongoing costs and significant risks in time and money with real estate as an investment at a level that you do not incur with a 401K.  If you buy mainly to flip, then be aware that if there are unforeseen issues with the house or the market sours as it can, you could be stuck with an immovable drain on your income.  If you lose your job could you make payments?  Many, many people sadly lost their homes or investment properties that way in 2008-2010.
I hope things work out and odds are that they will, but there's always a risk profile with any investment particularly an illiquid one like property. Here you're taking the risk that the local market in your area doesn't tank or that if it does that you can liquidate your houses quickly and retain most of the capital. Some areas are more stable than others, but things can change in decades.   My parents live in a decent part of CT. House prices were high in the early 2000s. Then one of the biotech firms around here pulled out. One firm was not so big a deal - 30000 jobs is quite a bit but the area didn't become rich off one company -  but it turns out that was the start of an industry trend. 3 more go, and suddenly property values crashed. Luckily, we have a pretty small house for the area so most of the assets aren't tied up in it, but it's pretty alarming to see a formerly upper middle class neighborhood become filled with overgrown lawns and for sale signs that hang around long enough to gather moss. When my parents sell after they retire they might be taking a hit in nominal terms, never mind real terms factoring in inflation.  This is about investment real estate though. I do think there is a more intangible emotional and stability gain you get from owning the land or property you live in.
I would agree with the other answers about it being a bad idea to invest in stocks in the short term. However, do consider also long-term repairs. For example, you should be prepared to a repair happening in 20 years in addition to repairs happening in a couple of months. So, if it is at all possible for you to save a bit more, put 2% of the construction cost of a typical new house (just a house, not the land the house is standing on) aside every year into a long-term repair fund and invest it into stocks. I would recommend a low-cost index fund or passive ETF instead of manually picking stocks. When you have a long-term repair that requires large amounts of money but will be good for decades to come, you will take some money out of the long-term repair fund. Where I live, houses cost about 4000 EUR per square meter, but most of that is the land and building permit cost. The actual construction cost is about 2500 EUR per square meter. So, I would put away 50 EUR per square meter every year. So, for example, for a relatively small 50 square meter apartment, that would mean 2500 EUR per year. There are quite many repairs that are long-term repairs. For example, in apartment buildings, plumbing needs to be redone every 40 years or so. Given such a long time period, it makes sense to invest the money into stocks. So, my recommendation would be to have two repair funds: short-term repairs and long-term repairs. Only the long-term repair fund should be invested into stocks.
If your goal is to have a 400K net worth, in 11 years, and you invest 2144 the entire time you will need a rate of return of at least 6.4%.  This is assuming that you have zero net worth now and it does not consider your house.  Obviously the house will be worth some amount, and the mortgage balance will go down.  However, it cannot really be calculated with the details provided.   It seems like your risk tolerance is low.  You may want to head over to Bogleheads.org and look into their asset allocation model.  They typically site about a 7% compounded growth rate which will more than meet your goals.  They probably have information for European investors that map to the funds that we use here in the US.   Keep in mind, during this time you will likely receive raises, if you start out assuming you will hit the 400-500k mark, and stick to the plan, you will likely blow that goal away.   Also keep in mind the three legs to wealth building:  giving some, spending some, and investing some.  Your question is addressing the investing portion make sure you are also enjoying your money by spending some on yourself; and, others benefit from your prosperity.  Giving to causes you deem worthy is a key component to wealth building that is often overlooked by those interested in investing.
I have done something similar to this myself.  What you are suggesting is a sound theory and it works.  The issues are (which is why it's the reason not everyone does it) : The initial cost is great, many people in their 20s or 30s cannot afford their own home, let alone buy second properties.  The time to build up a portfolio is very long term and is best for a pension investment.  it's often not best for diversification - you've heard not putting all your eggs in one basket? With property deposits, you need to put a lot of eggs in to make it work and this can leave you vulnerable. there can be lots of work involved. Renovating is a huge pain and cost and you've already mentioned tennants not paying!  unlike a bank account or bonds/shares etc.  You cannot get to your savings/investments quickly if you need to (or find an opportunity)  But after considering these and deciding the plunge is worth it, I would say go for it, be a good landlord, with good quality property and you'll have a great nest egg.  If you try just one and see how it goes, with population increase, in a safe (respectable) location, the value of the investment should continue to rise (which it doesn't in a bank) and you can expect a 5%+ rental return (very hard to find in cash account!)  Hope it goes well!
"Given the current low interest rates - let's assume 4% - this might be a viable option for a lot of people.  Let's also assume that your actual interest rate after figuring in tax considerations ends up at around 3%.  I think I am being pretty fair with the numbers. Now every dollar that you save each month based on the savings and invest with a higher net return of greater than 3% will in fact be ""free money"".  You are basically betting on your ability to invest over the 3%.  Even if using a conservative historical rate of return on the market you should net far better than 3%.  This money would be significant after 10 years.   Let's say you earn an average of 8% on your money over the 10 years.  Well you would have an extra $77K by doing interest only if you were paying on average of $500 a month towards interest on a conventional loan.  That is a pretty average house in the US.  Who doesn't want $77K (more than you would have compared to just principal).  So after 10 years you have the same amount in principal plus $77k given that you take all of the saved money and invest it at the constraints above. I would suggest that people take interest only if they are willing to diligently put away the money as they had a conventional loan.  Another scenario would be a wealthier home owner (that may be able to pay off house at any time) to reap the tax breaks and cheap money to invest. Pros: Cons: Sidenote:  If people ask how viable is this.  Well I have done this for 8 years.  I have earned an extra 110K.  I have smaller than $500 I put away each month since my house is about 30% owned but have earned almost 14% on average over the last 8 years.  My money gets put into an e-trade account automatically each month from there I funnel it into different funds (diversified by sector and region).  I literally spend a few minutes a month on this and I truly act like the money isn't there.  What is also nice is that the bank will account for about half of this as being a liquid asset when I have to renegotiate another loan."
Okay as long as you aren't dumb enough to actually think this would be worth pursuing. I don't want you to waste your money when it could go towards something nice, like your house budget.  If you really do believe they are overvalued there are much better strategies.
As user14469 mentions you would have to decide what type of properties you would like to invest in. Are you after negatively geared properties that may have higher long term growth potential (usually within 15 to 20km from major cities), or after positive cash-flow properties which may have a lower long term growth potential (usually located more than 20km from major cities). With negative geared properties your rent from the property will not cover the mortgage and other costs, so you will have to supplement it through your income. The theory is that you can claim a tax deduction on your employment income from the negative gearing (benefits mainly those on higher tax brackets), and the potential long term growth of the property will make up for the negative gearing over the long term. If you are after these type of properties Michael Yardney has some books on the subject. On the other hand, positive cash-flow properties provide enough rental income to cover the mortgage and other costs. They put cash into your pockets each week. They don't have as much growth potential as more inner city properties, but if you stick to the outer regions of major cities, instead of rural towns, you will still achieve decent long term growth. If you are after these type of properties Margaret Lomas has some books on the subject. My preference is for cash-flow positive properties, and some of the areas user14469 has mentioned. I am personally invested in the Penrith and surrounding areas. With negatively geared properties you generally have to supplement the property with your own income and generally have to wait for the property price to increase so you build up equity in the property. This then allows you to refinance the additional equity so you can use it as deposits to buy other properties or to supplement your income. The problem is if you go through a period of low, stagnate or negative growth, you may have to wait quite a few years for your equity to increase substantially. With positively geared properties, you are getting a net income from the property every week so using none of your other income to supplement the property. You can thus afford to buy more properties sooner. And even if the properties go through a period of low, stagnate or negative growth you are still getting extra income each week.
Yes you should invest; and yes you should save for the house down payment. These should be two separate pools of money and the goals and time frames for them are different. With a 3 year time frame for the down payment on the house, the risk you should accept should be essentially zero. That means it is less of an investment and more plain vanilla savings account, or maybe a higher interest account, or a CD. The worst thing to have happen would be to try and save for the house while the value of your investment keeps dropping.  You have to decide how to allocate your income between retirement accounts and saving for the house, while still meeting all your other obligations. The exact balance depends on how much you need to save for retirement, and things such as rules for the company match.
I'm normally not a fan of partitioning investment money into buckets but your case may be the clearest case for it I've seen in awhile.  Your income and saving is good and you have two clearly defined goals of retirement saving and saving for a house each with very different time frames ~30 years and 3-5 years respectively. For medium term money, like saving for a house, just building up cash is not actually a bad idea. This minimizes the chance that a market crash will happen at the same time you need to withdraw the money.  However, given you have the means to take more risk a generally smarter scheme would be to invest much of the money in a broad liquid bond funds with a somewhat lower percentage in stocks and then reduce the amount of stock each year as you get closer even moving some into cash.  This gives reasonable positive expected return while lowering the risk of having to sell during a crisis as the time to purchase gets shorter and shorter. The retirement money should be invested for the long term as usual.  A majority in low-fee index stock funds/etfs is the standard advice for good reason.
I would suggest, both as an investor and as someone who has some experience with a family-run trust (not my own), that this is probably not something you should get involved with, unless the money is money you're not worried about - money that otherwise would turn into trips to the movies or something like that. If you're willing to treat it as such, then I'd say go for it. First off, this is not a short or medium term investment. This sort of thing will not be profitable right away, and it will take quite a few years to become profitable to the point that you could take money out of it - if ever. Your money will be effectively, if not actually, locked up for years, and be nearly entirely illiquid. Second, it's not necessarily a good investment even considering that. Real estate is something people tend to feel like it should be an amazing investment that just makes you money, and is better than risky things like the stock market; except it's really not. It's quite risky, vulnerable to things like the 2008 crash, but also to things like a local market being a bit down, or having several months with no renter. The amount your fund will have in it (at most $100x15/month) won't be enough to buy even one property for years ($1500/month means you're looking at what, 100-150 months before you have enough?), and as such won't have enough to buy multiple properties for even longer, which is where you reach some stability. Having a washing machine break down or a roof leak is a big deal when you only have one property to manage; having five or six properties spreads out the risk significantly. You won't get tax breaks from this, of course, and that's where the real issue is for you. You would be far better off putting your money in a Roth IRA (or a regular IRA, but based on your career choice and current income, I'd strongly consider a Roth). You'll get tax free growth, less risky than this fund AND probably faster growing - but regardless of both of those, tax free.
I would say that, for the most part, money should not be invested in the stock market or real estate.  Mostly this money should be kept in savings: I feel like your emergency fund is light.  You do not indicate what your expenses are per month, but unless you can live off of 1K/month, that is pretty low.  I would bump that to about 15K, but that really depends upon your expenses. You may want to go higher when you consider your real estate investments.  What happens if a water heater needs replacement?  (41K left) EDIT:  As stated you could reduce your expenses, in an emergency, to 2K.  At the bare minimum your emergency fund should be 12K.  I'd still be likely to have more as you don't have any money in sinking funds or designated savings and the real estate leaves you a bit exposed.  In your shoes, I'd have 12K as a general emergency fund.  Another 5K in a car fund (I don't mind driving a 5,000 car), 5k in a real estate/home repair fund, and save about 400 per month for yearly insurance and tax costs.  Your first point is incorrect, you do have debt in the form of a car lease.  That car needs to be replaced, and you might want to upgrade the other car.  How much?  Perhaps spend 12K on each and sell the existing car for 2K?  (19K left). Congratulations on attempting to bootstrap a software company.  What kind of cash do you anticipate needing?  How about keeping 10K designated for that?  (9K left) Assuming that medical school will run you about 50K per year for 4 years how do you propose to pay for it?  Assuming that you put away 4K per month for 24 months and have 9K, you will come up about 95K short assuming some interests in your favor.  The time frame is too short to invest it, so you are stuck with crappy bank rates.
I don't know anything about Australian tax law, the Australian real estate market, or your parents' ability to repay the loan. However, no matter what the answers to those questions are, I do not recommend that you go through with this.  The reason is the risk. Usually, with an investment, you are risking the money that you invest. However, with this investment, you are not only risking the money; you are also risking both you and your fiancé's relationship with your parents.  If your parents have trouble paying back this money in a few years when you need it for your house, how will that affect how you feel about your parents? How will that affect how your fiancé feels about them? It will make family gatherings very awkward for everyone at least. Don't put family harmony at risk for the sake of an extra 2.8% return. There are other ways to invest that risk only money.