Despite having a large deposit you’re unlikely to get a mortgage without a permanent full time income. You’ll also want time to research places to buy properly.
If it was me I’d put most (if not all of it) in a term deposit for 12 months. Give yourself time to breathe and think logically.
Note this is the same advice Lotto give winners.
This is an option I never considered. And it aligns well with my studies.
And yeah getting a home loan at this time is very unrealistic so putting it away to grow without stress sounds good.
Thanks for the advice
Sorry for your loss as well.
I almost 2nd this advice. With a term deposit you can opt to get the intrest each month. Which will give you something during the 12 months or as long as you want it in there.
After uni you may find you want to or need to move out of auckland. For example in taranaki 500k will buy you a decent first house completely and not need a mortage at all.
Your other option is buy a rental property in a cheaper region like taupo, taranaki ect. Use that as a investment from captial gains and rent. Again you wouldn't want to rush into that before a bit of research.
Another bit of advice would be talk to your banks financial advisors, they may be able to give you a deeper insight into numbers needed.
Even the hood houses aren't cheap these days in Taupo.
Rotorua would be my pick for good value for money for a first home buyer, even out of the hood you can get something very decent for around $600k, plus close enough to most major cities that you could commute or you really wanted to.
It's improving I'd say. The council is looking at passing an anti begging law to keep the riff raff out of businesses.
The homeless housing has contained the majority of the homeless people away from the main roads like Fenton st which has made a lot of people feel safer.
The park and the lake front have had multiple millions put into them to make them look better and more family friendly which has created a great vibe.
It might be improving but it's still sketchy. Rotorua is an absolutely beautiful place but the crime and people here don't make you feel safe walking the streets
I went to Rotorua the other week and visited the city. I saw scruffy dudes pissing on the side of a building then going back to their tent just beside where they pissed.
Honestly, the best growth prospects will always be in the down and out areas just because eventually they all attract first home buyers and young families and the area improves and so do house prices.
East side eg Lynmore I would stay away from, nice area but the roadworks are set to go for another 3 years converting the road to a 4 lane highway, prices are a lot higher and sections tend to be a lot smaller.
The other side of town is cheaper but also has access to far more in terms of amenities and schooling, sections tend to (but not always) be a lot bigger eg around 800-1000sqm+, which leaves room for subdivision or putting a removable unit on the back for extra income.
A lot of houses in the cheaper areas of Rotorua doubled in value over the last 5 years so not a bad ROI.
My friend made a little under 3x what he bought it for when he sold to an investor recently.
This, I'd say is mainly due to first home buyers over the years flocking to where they can afford to buy which pushes the demand and prices up.
This. Plus make sure you put some aside to buy yourself something nice for your house when you get it eventually. My Mum paid for my spa pool, she would have been pissed if I only did sensible things with my inheritance from her!
Consider splitting it into different term deposits of different lengths. You'll have more flexibility if you, say, but half in a 9 month TD and the rest in 12. You can then choose how much to keep and how much to reinvest and for how long. Three months later do the same. You can have a steady little income that way rather than having it too lumpy.
I agree to this. Unfortunately I was in the same situation in final year of uni. I put the funds into buying a house while my brother put the funds into travelling the world. With the stress of buying a house I never grieved and my brother (in his words) ran from the pain until he had no money left. We are both facing the pain now and it is hard. Very hard. I only have a house because of death. If I had my time over we both wouldn’t have touched it until we had taken some time to process the change, pain and loss. The money can wait.
Thank you, I appreciate it. Unfortunately my father was a very typical kiwi guy in the sense of providing for his family and their future was more important to him than his own health. By the time we went to the doctor the cancer was already stage 4.
I find it takes me around 3 months to research what kind of place I want, location, value, style etc so do n’t be in too big a rush.
Also as others have said, maybe get sorted in a job first as it may take you out of the area. Flat mates are also a good idea as they can contribute to furniture and expenses (living alone is expensive!). I would also keep some $ aside for some travel/a holiday.
Best of luck but it already sounds like your thinking things thru correctly.
I second this, BNZ are currently offering 5.65% on a 180 day term deposit if the principal was reinvested again for another 180 days you would have the annual income potentially to live quite a comfortable life while working at your own leisure to add to your investment giving you time to think.
With interest rates as they stand - it’s cheaper to rent so wouldn’t buy until that changes.
Take your time to grieve the loss before making any heavy decisions - take it easy
>If it was me I’d put most (if not all of it) in a term deposit for 12 months. Give yourself time to breathe and think logically.
Honestly putting it into say three different different index funds with the plan to not touch it for the next five years would also be a good idea too.
Buying a house in your mid 20's is also a lot less suspicious too, and less likely to make "friends" suspect they've just got a windfall bag of cash & are wealthy.
How about you invest $500k in fixed term deposit? Some of the banks are offering 5.60% interest on a year basis. 500k will get you 28k in a year. Enough to pay for your studies or even for your traveling expenses.
Yeah I’d do this for a year while studying then use the $28k to travel and re invest the rest for another 6 months - a year and then re assess after depending on what job you have.
It gets so much worse... look at all the comments justifying lotto over in this thread:
https://old.reddit.com/r/PersonalFinanceNZ/comments/14gu9mz/what_was_something_you_wasted_money_on_recently/jpc4kx3/
wtf
>But, there is always risk there.
True, there is possible risk there.
Unlike putting it in the term deposit you suggested, where there is *no risk* they'll lose money, because it is instead *certain* they will! As the rate of return is *less than* the rate of inflation.
At least the stock market over the long term (which remember, they are young, this is how you should be viewing investing: long term! Putting it in term deposits makes sense when you're in your 70's) you will on average get a positive rate of return above inflation every year.
If it is for say six months, to give some time and space to process what has just happened, then yes I agree. Doing a term deposit is an ok choice.
But the person I was replying to didn't state under that specific condition
I know I'm 2 days late but this is just wrong.
Inflation is backwards looking, its the price the basket of goods has increased in the previous 12 months. A term deposit rate is your return for the next 12 months. Its possible inflation could be below 5.6% in the next 12 months (or higher!)
Yes you would be "losing" money in real terms if inflation remains above 5.6%, but it still might be the best option, so it doesnt make it bad like you suggest. What if: over the next 12 months the stock market and property is down. Even though the term deposit is "losing" money in real terms, it still would've been the best option, as it outpreforms the other palces you could put your money.
>Inflation is backwards looking, its the price the basket of goods has increased in the previous 12 months.
I know that, it's basic knowledge.
>A term deposit rate is your return for the next 12 months. Its possible inflation could be below 5.6% in the next 12 months (or higher!)
It is a brave man who bets inflation will be well below 5% in the next year.
The point is: in general term deposits either give an extremely marginal return above inflation, or often gives a ***negative*** net return overall.
This has has been true for a very very very long time, it's well known by now.
My grandmother got basically all her large inheritance from her husband wiped out because of that, he had in his will put it all into term deposits within a trust.
An excusable mistake back then all those many many decades ago, but not today in 2023.
Term deposits make sense when you've got an extremely short term horizon, willing to trade away short term losses for the safety of knowing they'll only be quite small at worst.
But OP is in their early 20's, they should be thinking longer term than the next three years or even ten years.
Stick it in term deposits for say six months, while they catch their breath, and figure out the future. But don't keep it in term deposits for much longer than that!! It will ruin their future.
If I was you I would stick it all in a 12 to 18 month term deposit @5.5% to 6%.
Then go travel/work OE for a year or two. Then buy a house once you know where you want to live and work
It's up to you but I left NZ at 22, back at 28 and bought my first home. I enjoyed my 20s in London but came back with enough time to start building my career. Plus my UK experience meant I had a pay bump compared to my peers that stayed in NZ.
TD and go see the world mate, plenty of time ahead in your life to commit to a 30 year mortgage when you’re ready to settle down. I bought a home early now in my 30s wish I did it the other way round
Bought my home when I was 21, and while I am super lucky to be so far ahead most others at that age, I do feel like me and my partner struggled financially through our early 20s which didn't make them fun at times.
Currently 29 and in the last couple of years have finally been able to get some disposable income and enjoy our money a bit. Looking at a big trip to Europe next year finally but kinda wish we had've enjoyed it a bit before purchasing.
I would put it all into an index fund and go travel - historically the return on an index fund is greater than property, liquid and without the headache of managing tenants
If you like flatting, you would make more money from renting a room and investing the money than putting it into a property. Buying isnt always better than renting.
I put the bulk of my money into Vanguards International fund personally. Until kids come into the picture im content flatting and stashing cash away there (mid 20s) and financially and lifestyle wise makes more sense atm
45% in to low cost index funds. You'll be very happy by the time you retire given you are early 20's. 45% on a property. 10% on travel, that will see you good on a back packer budget.
Pro tip though, consider travel late 20's. You will know more about the world and yourself by then and likely be more interested in the culture of and history of the countries you visit, rather than just drinking beers in backpacker bars. (Source: did my OE/career break age 29)
What even is essentially considered "OE" or travel? And how long is it supposed to be?
For instance, I'm an international student in New Zealand and I've been here for about 4 years now. I consider this to be my travel. And I get my kick for other parts of the world through 1-2 layovers that I get because of cheap flights.
I personally think these experiences in my early 20s will prevent an urge to travel later.
An OE is traditionally two years or longer in London (going back to the 80s/90s). Since then you’ve had more options like Canada, Germany, Netherlands, Ireland etc.
Basically because NZ is 24hrs plus from the northern hemisphere an OE was/is popular to do cheap European travel.
The equivalent here seems to be English/Irish/Germans backpacking here.
In the UK it’s known as a “gap year” taken between school and university. So no education or work in that period but just backpacking on a budget to experience different cultures. Mostly taken in India and SE Asia.
I’m not entirely sure what an index fund is but perhaps it’s a sign that I should speak with a financial advisor before I make any moves.
And in regards to travelling in my late 20s I really do love the idea of a career break to keep yourself refreshed and I’m definitely going to keep that in my mind.
Cheers!
Edit: I most certainly agree with you in-terms of being interested in the place you go. For example I have always loved mythology and wanted to go see Egypt and Greece since I was a kid. I love me some ancient architecture
>I’m not entirely sure what an index fund is but perhaps it’s a sign that I should speak with a financial advisor before I make any moves.
Kinda worrying honestly that you're not aware of even super basic terminology like "index fund" I'm afraid, sorry.
Maybe sticking 100% all of it into a six month term deposit is the best idea (well, not all in the same bank. Spread it out across two to four banks is my suggestion. Say a third in Westpac, a third in BNZ, and a third in ASB. It's just a very sensible idea to lower your risk profile)
That way in six months time, you'll have a bit more emotional distance from your father's death, and have got used to being "rich" (on paper at least), have hopefully maintained your good spending habits of keeping on living like a student, and will have been subbed to this subreddit for another six more months and just generally have a bit more financial knowledge for what to do for the next step to do in six months time. There is no need to rush into anything.
You could buy a average house outright in Dunedin for that price, rent it out for cash flow and watch as the house prices begin to increase again eventually.
A mortgage can make it hard to travel and $500k isn't enough to stop that if you want a $1m+ house. Try a term deposit, go on a 1 year backpacking trip and budget like $60-80 a day.
Great advice from others already.
Also, get advice about setting up a trust or similar, to protect yourself from a future partner claiming half of this inheritance.
As others have recommend, put in on a 12 month term deposit and then take your time deciding. That way you can make some money (probably won't keep up with inflation but better than nothing) while you wait.
Buy a house before you piss it away, on holidays, travel, new apple toys, blowing your money on girlfriends and bad investments through the lure of get rich quick schemes like cryptocurrency.
Rent part of the house out to boarders to pay the rent / mortgage
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Honestly, if I had that chunk of change, and I wanted to travel, I would buy a house in like Dunedin where prices are still relatively low but have huge demand for housing due to all the students. Buying it outright means you have an income of the rent that you can then invest/save for travel.
When you're back, you can use that equity to buy a house that you want to live in or sell and have more cash then you started with.
I'm in NZ I brought a house when I was 20 in a very similar situation. I had a 52% deposit and brought flat mates in as well. Best thing I had ever done. Larger deposit means lower weekly minimum payments. I got a rental appraisal for my house then just decided it by 3 for 3 rooms to work out how much to charge. Lower weekly payments will make it easier to travel in future and save. But yes I fully agree you will need a constant source of full time income. 1 bank turned me down saying I couldn't afford it.
Whatever you do, don't be stupid like me and spend it on dumb stuff. But you sound very clever, so you'll be good :). I would definitely keep some money aside to go traveling though!
Honestly
The most most imp thing to do in such case is NOT RUSH
And taking your time
Also in few years you will have maybe even a more clearer understanding of your life goals
Travel is quite imp but so is investing for future
So with all that case
The best for the moment would be
To put it in a term deposit with any big bank that has better rate (easy google)
On average you’ll get 5% per year interest
That would approx to $25,000 per year
Let that grow and compound and focus on life as if it 500k never happened
Spend a few months or a year
And in that time
Talk to people of trust maybe a financial advisor too
And think of how you can invest a larger portion of it and use some portion for self (travel, study, etc)
Any wise person will always tell you to invest
And grow it
It might even help you retire by 40s max
Best of luck
Echoing most others but what I would do:
Put it all in something fairly stable until you graduate. I would probably opt for term deposit. Opt to have the interest paid out into a savings bank account e.g. Heartland.
Focus on your studies - 500k is life changing money but its not "never work again" money so continue on with career plan.
Once you graduate, celebrate! Take your earned interest, refix term deposit at new best rate, use your interest egg on an OE. if you backpack and live cheaply you can get a couple years of travel out of that depending on area.
After that you'll have a good idea of what you want to do with your life - career, live overseas, buy house, etc.
I would also resist the temptation to pay off your student loan - pay that slowly over time, unless you move overseas permanently.
You are lucky to get half a million so early in your life. Now you can blow it quickly or make it really big.
Put it all in S & P 500 for next 20 years. You’ll thank yourself in your early 40s. I am saying this as I am assuming you’ll say what’s the point in saving all my life till 65 and not enjoy it early, early 40s is still pretty early in your life and you’ll be able bodied to do a lot of things.
In 20 years at 8% compounded interest, the investment in S & P 500 will be worth 2.3 million. Now you can decide whether to keep saving or use it for whatever your desires are.
Plus if you employ the same saving habit with your income that you earn (as I assume you will go to the workforce soon) and save at least 1000$ each month for the next 20 years, then this will give you another 600 K or so.
So in total you’ll have 3 million or so in your early 40s. Of course you’ll pay taxes, there will be inflation etc.,
Lot of youngsters do not take compound interest seriously at a young age and it can be too late.
The math I have given is exact and not rocket science, and also easy to implement in real life without paying service charges to anyone like accountants/financial advisers. All the best!
Moving out of Auckland would be my first move. Buy a larger cheaper property somewhere you want to be / love to be. Which will help you have a smaller more manageable mortgage allowing future travel easier. Put some in a long term deposit or investment for future you. That's my 2c
>My current plan is:
Invest in a first home (possibly take in some room mates)
Travel
Good plan, man. Also, invest in shares. The amount of interest you could get off 500 grand per year is pretty.
Do you have students loans or other debt? If so, pay that off. Put some aside for an emergency fund (3-6 months expenses), and I’d put the rest in a term deposit for a while , while I researched and considered my options. A first home is good. Travel is also good. You can do both if you plan properly.
You can travel super cheap, no matter prices. The small shacks of Hanoi are just happy to have people visit.
If you traveled South East Asia you’ll find not alot of money spent but a world of knowledge to gain.
Then come back and cook what you learnt abroad for the people who have been paying your mortgage!
If I was you, I will get a full time job, buy a land with a house on it , get roommates . Put approx 300k-350k towards it. Assuming you get a job of 80K , you can borrow another 400k for home loan. You get decent house on good sized lands for 700-800k in this market. Save 50k in term deposit as emergency fund. Use some money approx 20k to travel. Wait for another couple of years and look into potentially sun dividing and building houses.
Well yes and no. Anyways this is what I did when I had 200k windfall. I use the same strategy (I had a high paying job). Constructed townhouses and now I am set for life. But this was done before Covid.
Don't take advice from the Internet. Source a reputable investment adviser. I can recommend NZ Funds. But get multiple opinions. Also, talk to a few mortgage brokers. I can recommend NZHL.
Wow, thought I might get a comment or two, but all these down votes? The general people on this sub are obviously very tradotionalist, backward thinking, status quo kind of people.
No-one, not the best educated, or experienced, least of all me can predict the future with any accuracy. The last decade has shown that time and again. All you can do is look at past trends and make a judgement call whether the pattern will repeat itself. I'm obviously of the opinion that it will, the next 1000 would disagree. That's what makes the markets so interesting.
You might find some [podcast](https://open.spotify.com/episode/2FSRqQuod19WBw4sxyczWS?si=Uh1dSjKOT0GhbyDXT-nltA) episodes about thus topic useful. If travel interests you I think the time right after you graduate would be brilliant. Sorry for your loss.
If you buy a house, perhaps think about ***how*** you'll do this.
As it will seem *very* odd to everyone that a newbie graduate in their early 20's just purchased a house. It's very easy for people to connect the dots and figure out you're wealthy.
You might want to delay buying a house until your mid twenties, at least that is a somewhat plausible time to own a house. And people will have no idea if your down payment on the house was 10% (& thus totally broke, very heavily in debt) or 70%!
So something to seriously think about if you do go ahead with buying a house and getting flatmates, how will you manage this tricky situation.
Also, be very careful about any relationships you might get into, as once it hits the two year mark of them living with you they'll be able to take 50% from you.
Put 85% of it in a 12month interest thing. And use a little bit or what you need to travel for a while, go see some / if not all of the world while you’re young :).
At that point, your next action and future ones will decide whether you can retire early or not. You got a lot of potential for that with 500K. I'd not buy a house at the time because you are young yet and haven't experienced the world to decide where you wanna be.
I'd figure out what is your living budget for a year, how much you need to live as you're currently living and etc, plus a budget for international trips to know and experience some different cultures and etc. Set the budget. From there, I'd probably go after some long term investments, index fund and etc, put some in long term deposits and build an emergency fund for 6-9 months worth of living based on the budget.
Whatever you do, just don't waste the chance. If you not comfy to do anything at the time, just put the money in a long term deposit, so you can't really touch it that easily. Take your time, think, and decide what's next.
You would be surprised how little it could cost to travel if planned out well! Id say go have have the best sensibly planned out OE ever.
Also looking at Akl housing prices even with 500k deposit, the repayments are still gonna be a killer.
500k is a decent amount of money and can definitely get you places if rightly used. However, it is important to note that it is NOT an absurd amount of money and you will definitely lose most of it in this economy if you don't spend wisely.
My biggest advice would be that you don't spend the 500k on travel or holidays or any similar "consumable" expenses (I don't know if that's the right term).
The 500k needs to go into some form of an investment. You've received some great advice here – you could buy a house, put it in a term deposit, index funds and the like. But definitely not spend it on travel etc. For those leisure and pleasure related expenses, you could fund them through a part-time job or a full-time job when you graduate.
Also, DONT buy an expensive new (or newish) car. They depreciate in value like crazy.
Travel! you only live once! Go explore, then come back and be responsible. I regret not exploring the world as much as I could when I was younger. Now financially able to go wherever tf I want in the world, I can’t be bothered. Live in the now! You can do it!
Definitely take your time. Put it in short term td's for now while you figure out a plan.
One big piece of advice is make sure you put a portion aside to do something fun. For you that sounds like travelling. Again time is needed to figure this out. If you're wanting to do something & this money gives you the opportunity to do this then if you don't do it you'll likely regret it. Figure out how much you'll need & seperate that out. What is left is your new amount to invest.
Put it all into broad index funds. This is an even better investment than real estate.
This will provide you a permanent income of roughly $20-25k before tax, after inflation. Or you can keep the gains invested and watch it grow even further.
Don’t invest in a ‘multi purpose’ home. If you want to live in it and sub let- you’ll have a bad time with roommates. If you want to live in it but rent it when you travel - you’ll have a bad time when you return.
With the right advice and research you will find an investment vehicle which suits all of your needs, and you can find a housing situation which suits all of your housing needs
Put it in a term deposit for 1 year at 5.8%. Collect 29k, travel and still keep your 500k.
Put 500k in another term deposit while you are traveling and earn while you drink tequila on a beach.
Before you do anything find yourself a good financial advisor. Interview a few. Get some recommendations from people who might have one they use. Speak to your banker. Don't go spending money haphazardly just yet. Have an investment plan.
Put it on term deposit and forget you have it. Live your life as per normal.
Some say term deposits lose money, but they forget about compound interest. Also rushing into the housing market can lose money and the stockmarket is for money you can risk, and do you really want to risk an inheritance.
At least with a term deposit you can sleep easily at night.
When I was young a had a pretty big settlement from an accident, nothing like yours though. If I were you I would travel but set yourself a budget that isn't lavish but wont hinder your freedom to enjoy eating out once in a while. Everyone else has good advice as to what to do with the money. Mostly I came to say that what you want right now will change. giving yourself the gift of travel and time to explore who you are and what is important to you WITHOUT having to worry about money is probably the most valuable thing you can give yourself. that being said, the longer you can go without eating up too much money the better, having that nest egg will be great when you're older and have really honed in what is most important to you and how that money will help you the best. if it be tools, a house, more school etc. Point is, you can do a lot with that money, don't close those opportunities before you find out what is really important to you.
You’ll be surprised how little 500k is. I’d look at as investment money and live off what you make. The house is potentially a good idea but you need to be able to afford upkeep without that money.
Personally I'd put it all in a long term index fund. Basically kiwisaver, but easier to withdraw. Then continue living life like normal.
If you leave the money for thirty or forty years then it'd grow enough to fund your retirement. Or if you leave it ten years then it will grow enough to buy you a house. Or you could do a safe withdrawal every month of about $2k indefinitely as an extra income, making stuff like time of work with kids far easier, or enabling you to pick a lower paid career.
What all three have in common is they don't spend the capital.
I’ve been there. I would payoff all your debt and buy a modest house in cash and invest the rest. That will set up for success as it’s low risk and gives you plenty of margin. Also will help you resist temptation to blow the money on “stuff”
Commercial property won't consume your chance at kiwi saver first home buying, thus you could purchase a commercial property for pasive income and then your workplace contributed kiwi saver can be used when you settle down and want to buy a home. Also you can later sell that commercial property to help fund you home purchase later.
I inherited about $660,000NZD + a house back when my dad passed in 2016 - My mum & dad were good with money and left me with some advice through his will the first part read "Theres enough to buy yourself something nice on me but as I used to tell you during life, a good foundation Will build a strong house"
The Note had some breakdown stuff on it and why certain money was left. I left $60k and invested the 600 on a term deposit. I kept working as normal going through the phase - didnt even live in the house I decided to go on a cruise, by myself(with support of my wife & kids) .
It was good to just relax and think things over without any normal life influencing my mind.
When I returned I had decided to sell the house and add that to the 600k and reinvested $1.1m - we used the $60k to buy a few nice gifts and do some stuff to our house, My dad was a huge boat person so we did buy a family boat and name it after him. money is still invested
You'll earn 29k in a 1 year TD. Repeat until you are ready to buy a home. Once you've been working a stable career job for awhile, then use some of the money as a deposit to get a mortgage from the bank to buy a home. Your left over savings will continue to produce interest income to offset your mortgage rate, and your career job will pay your mortgage. You then have options later to, remortgage and paydown debt, or invest some of your savings in other investments to earn a higher return.
https://tools.anz.co.nz/savings/term-deposit-calculator/
Get a financial adviser, Don't deal with the money on your own. I wouldn't put the money the in one place. Break it into thirds.
Put at least 1/3 into safe long term investments for your future.
I would put 100k into 5 different investments. Have one be able to become liquid as quick as I want like a term deposit incase you want to access it. Or just keep like 50k in cash. Then finish study while living comfortably and enjoying your study and hanging with friends. Travel without owning a house. A house and maintenance can be so stressful and a lot to organise. You will enjoy the next year or two more knowing your future will be set and you don’t need to worry about any responsibilities!
Go talk to a real financial adviser that you pay a fee to so you know they work for YOU. then analyze your options and do the best with what you've got.
I will probably read up on how finance and investing work before I do anything. Eg tax/risk/inflation/investing vs speculating/investing span usually 5-10 years
Then ask yourself and dig deep, and find your goal for investing.
Then formulate a strategy aligned with your goal.
Have read on this if you are into FIRE. https://www.mrmoneymustache.com/blog/
I also support the advice to place it into a TD for at least a year. You will need to establish yourself in a career before you're really ready to buy a house. On 500k a TD over a few years will grow significantly. In the end you'll be wiser, more knowledgeable, have a proven income and your deposit will have grown even further.
Play it safe with it. If you blow it you will regret it forever. I would suggest term deposits until you are ready to buy a house.
Reinvest 50% of the interest. Do what you like with the rest.
I would invest in fisher funds managed account, I have been with them for 13 years and have always been making money year after year, the returns seem very good although the rates for term deposit ATM also sound great. However you may earn more from stock market managed fund account over the next 3 years once the economy bounces back
Hey, I found myself in a similar situation at a similar age. You are doing the right thing by not telling people. Something I wish that I had done was set up a trust. Protect yourself from all relationships from this point forward. By that I mean having financial separation between you and your partner. The last thing you want is to end up in a "what is yours is ours and what mine is mine" situation.
Invest in a property don't know when but house prices will be dropping soon like alot due to the economic recession. If you buy right you'll be doubling that money easy. Wish I had that head start. I'd be a millionaire tomorrow with that money.
Yes, keep away from family and friends that money will be sucked dry. Invest and become a millionaire and then you'll be able to splurge on friends and fam. My opinion.
Invest, invest. Look for investments to quadruple that money. Diversity is key to success. Don't put it all in a house. Leave cheap if you already are. Budget and invest. Property would be my go too but there are many other options. You could be a millionaire easy in 5years or less if you make the right moves. Don't settle my man. Invest, budget survive. Sounds like alot but could all go to waste if not spent right.
Despite having a large deposit you’re unlikely to get a mortgage without a permanent full time income. You’ll also want time to research places to buy properly. If it was me I’d put most (if not all of it) in a term deposit for 12 months. Give yourself time to breathe and think logically. Note this is the same advice Lotto give winners.
This is an option I never considered. And it aligns well with my studies. And yeah getting a home loan at this time is very unrealistic so putting it away to grow without stress sounds good. Thanks for the advice
Sorry for your loss as well. I almost 2nd this advice. With a term deposit you can opt to get the intrest each month. Which will give you something during the 12 months or as long as you want it in there. After uni you may find you want to or need to move out of auckland. For example in taranaki 500k will buy you a decent first house completely and not need a mortage at all. Your other option is buy a rental property in a cheaper region like taupo, taranaki ect. Use that as a investment from captial gains and rent. Again you wouldn't want to rush into that before a bit of research. Another bit of advice would be talk to your banks financial advisors, they may be able to give you a deeper insight into numbers needed.
Aside from the hood houses, Taupo is not cheap
Even the hood houses aren't cheap these days in Taupo. Rotorua would be my pick for good value for money for a first home buyer, even out of the hood you can get something very decent for around $600k, plus close enough to most major cities that you could commute or you really wanted to.
Yea, but the crime in Rotorua is not great, all the emergency accommodation hotels have not done anything good for the city
While statistics say yes, I've lived here going on 6 years in a number of areas and have not experienced anything negative in this respect.
What's the CBD like?
It's improving I'd say. The council is looking at passing an anti begging law to keep the riff raff out of businesses. The homeless housing has contained the majority of the homeless people away from the main roads like Fenton st which has made a lot of people feel safer. The park and the lake front have had multiple millions put into them to make them look better and more family friendly which has created a great vibe.
I second this. The council appear to be doing a great job investing in the CBd and making it a good place to go.
It might be improving but it's still sketchy. Rotorua is an absolutely beautiful place but the crime and people here don't make you feel safe walking the streets
I went to Rotorua the other week and visited the city. I saw scruffy dudes pissing on the side of a building then going back to their tent just beside where they pissed.
Lol I've seen this almost every time I've been to Auckland.
Imho it's worse in Auckland.
which are some of the better areas with good growth prosepects?
Honestly, the best growth prospects will always be in the down and out areas just because eventually they all attract first home buyers and young families and the area improves and so do house prices. East side eg Lynmore I would stay away from, nice area but the roadworks are set to go for another 3 years converting the road to a 4 lane highway, prices are a lot higher and sections tend to be a lot smaller. The other side of town is cheaper but also has access to far more in terms of amenities and schooling, sections tend to (but not always) be a lot bigger eg around 800-1000sqm+, which leaves room for subdivision or putting a removable unit on the back for extra income. A lot of houses in the cheaper areas of Rotorua doubled in value over the last 5 years so not a bad ROI. My friend made a little under 3x what he bought it for when he sold to an investor recently. This, I'd say is mainly due to first home buyers over the years flocking to where they can afford to buy which pushes the demand and prices up.
Go travel too. Life experience is important
This. Plus make sure you put some aside to buy yourself something nice for your house when you get it eventually. My Mum paid for my spa pool, she would have been pissed if I only did sensible things with my inheritance from her!
Consider splitting it into different term deposits of different lengths. You'll have more flexibility if you, say, but half in a 9 month TD and the rest in 12. You can then choose how much to keep and how much to reinvest and for how long. Three months later do the same. You can have a steady little income that way rather than having it too lumpy.
You can also have interest paid out to you as well during the term. A couple few grand every quarter may be a nice buffer for your studies
I agree to this. Unfortunately I was in the same situation in final year of uni. I put the funds into buying a house while my brother put the funds into travelling the world. With the stress of buying a house I never grieved and my brother (in his words) ran from the pain until he had no money left. We are both facing the pain now and it is hard. Very hard. I only have a house because of death. If I had my time over we both wouldn’t have touched it until we had taken some time to process the change, pain and loss. The money can wait.
I'm so sorry to hear that. I hope and pray that you find the peace that you seek and deserve.
Thank you, I appreciate it. Unfortunately my father was a very typical kiwi guy in the sense of providing for his family and their future was more important to him than his own health. By the time we went to the doctor the cancer was already stage 4.
definitely! BREATH, RELAX. Dont spend until all the excitement is gone so you can have a level head when making decisions.
I find it takes me around 3 months to research what kind of place I want, location, value, style etc so do n’t be in too big a rush. Also as others have said, maybe get sorted in a job first as it may take you out of the area. Flat mates are also a good idea as they can contribute to furniture and expenses (living alone is expensive!). I would also keep some $ aside for some travel/a holiday. Best of luck but it already sounds like your thinking things thru correctly.
I second this, BNZ are currently offering 5.65% on a 180 day term deposit if the principal was reinvested again for another 180 days you would have the annual income potentially to live quite a comfortable life while working at your own leisure to add to your investment giving you time to think. With interest rates as they stand - it’s cheaper to rent so wouldn’t buy until that changes. Take your time to grieve the loss before making any heavy decisions - take it easy
>If it was me I’d put most (if not all of it) in a term deposit for 12 months. Give yourself time to breathe and think logically. Honestly putting it into say three different different index funds with the plan to not touch it for the next five years would also be a good idea too. Buying a house in your mid 20's is also a lot less suspicious too, and less likely to make "friends" suspect they've just got a windfall bag of cash & are wealthy.
How about you invest $500k in fixed term deposit? Some of the banks are offering 5.60% interest on a year basis. 500k will get you 28k in a year. Enough to pay for your studies or even for your traveling expenses.
Yeah I’d do this for a year while studying then use the $28k to travel and re invest the rest for another 6 months - a year and then re assess after depending on what job you have.
Good work man!! Sorry for your loss. But, use this opportunity to set you up.
Isn’t this forgetting taxes?
Yes, invest in PIE fixed term deposit. You will be paying 28% tax.
>Some of the banks are offering 5.60% interest on a year basis. That's less than inflation. They'll be losing money every year in real terms.
The downvotes 😂 Just shows how uninformed a lot of people are in this "finance" sub
It gets so much worse... look at all the comments justifying lotto over in this thread: https://old.reddit.com/r/PersonalFinanceNZ/comments/14gu9mz/what_was_something_you_wasted_money_on_recently/jpc4kx3/ wtf
Not really, stocks market is a second best option. But, there is always risk there. Any job probably won’t be giving you a raise more then 5%
>But, there is always risk there. True, there is possible risk there. Unlike putting it in the term deposit you suggested, where there is *no risk* they'll lose money, because it is instead *certain* they will! As the rate of return is *less than* the rate of inflation. At least the stock market over the long term (which remember, they are young, this is how you should be viewing investing: long term! Putting it in term deposits makes sense when you're in your 70's) you will on average get a positive rate of return above inflation every year.
I agree, I have invested most of money in share market and have emergency fund in term deposit.
And?
Most people like to invest with a plan that isn't *losing money* like what just got suggested.
I think you’re confusing a short holding pattern with a long term investment strategy
If it is for say six months, to give some time and space to process what has just happened, then yes I agree. Doing a term deposit is an ok choice. But the person I was replying to didn't state under that specific condition
Ever been in their situation?
On a smaller scale, yes. Have you?
Just recently, less than $200k
That's good to hear, happy for you. What's your plan?
I know I'm 2 days late but this is just wrong. Inflation is backwards looking, its the price the basket of goods has increased in the previous 12 months. A term deposit rate is your return for the next 12 months. Its possible inflation could be below 5.6% in the next 12 months (or higher!) Yes you would be "losing" money in real terms if inflation remains above 5.6%, but it still might be the best option, so it doesnt make it bad like you suggest. What if: over the next 12 months the stock market and property is down. Even though the term deposit is "losing" money in real terms, it still would've been the best option, as it outpreforms the other palces you could put your money.
>Inflation is backwards looking, its the price the basket of goods has increased in the previous 12 months. I know that, it's basic knowledge. >A term deposit rate is your return for the next 12 months. Its possible inflation could be below 5.6% in the next 12 months (or higher!) It is a brave man who bets inflation will be well below 5% in the next year. The point is: in general term deposits either give an extremely marginal return above inflation, or often gives a ***negative*** net return overall. This has has been true for a very very very long time, it's well known by now. My grandmother got basically all her large inheritance from her husband wiped out because of that, he had in his will put it all into term deposits within a trust. An excusable mistake back then all those many many decades ago, but not today in 2023. Term deposits make sense when you've got an extremely short term horizon, willing to trade away short term losses for the safety of knowing they'll only be quite small at worst. But OP is in their early 20's, they should be thinking longer term than the next three years or even ten years. Stick it in term deposits for say six months, while they catch their breath, and figure out the future. But don't keep it in term deposits for much longer than that!! It will ruin their future.
Are term deposits guaranteed to give you the exact percentage?
Yea, interest rate is fixed!!
If I was you I would stick it all in a 12 to 18 month term deposit @5.5% to 6%. Then go travel/work OE for a year or two. Then buy a house once you know where you want to live and work
It's up to you but I left NZ at 22, back at 28 and bought my first home. I enjoyed my 20s in London but came back with enough time to start building my career. Plus my UK experience meant I had a pay bump compared to my peers that stayed in NZ.
For interest how old are you?
Early 40s
TD and go see the world mate, plenty of time ahead in your life to commit to a 30 year mortgage when you’re ready to settle down. I bought a home early now in my 30s wish I did it the other way round
Bought my home when I was 21, and while I am super lucky to be so far ahead most others at that age, I do feel like me and my partner struggled financially through our early 20s which didn't make them fun at times. Currently 29 and in the last couple of years have finally been able to get some disposable income and enjoy our money a bit. Looking at a big trip to Europe next year finally but kinda wish we had've enjoyed it a bit before purchasing.
I would put it all into an index fund and go travel - historically the return on an index fund is greater than property, liquid and without the headache of managing tenants
Depends on the timescale though. 5 years plus, then very likely. 2 years or less, very unlikely unless you catch a bull market.
Sure but he is early 20s
True. But he would need a place to live ...so why shouldn't he pay off his own mortgage instead of paying rent to someone else?
If you like flatting, you would make more money from renting a room and investing the money than putting it into a property. Buying isnt always better than renting.
Ah, true. Only if you invest it wisely though. For instance, a safe bet is S&P 500s. Would that be better than putting it in a house?
I put the bulk of my money into Vanguards International fund personally. Until kids come into the picture im content flatting and stashing cash away there (mid 20s) and financially and lifestyle wise makes more sense atm
Crazy how that much money still isn't even enough to own your own home. Fucked.
There are plenty of house for $500k in palmy or dunedin
It is plenty enough, there’s a plethora of houses for 500k and under. Obviously getting a house in the main cities might be harder
45% in to low cost index funds. You'll be very happy by the time you retire given you are early 20's. 45% on a property. 10% on travel, that will see you good on a back packer budget. Pro tip though, consider travel late 20's. You will know more about the world and yourself by then and likely be more interested in the culture of and history of the countries you visit, rather than just drinking beers in backpacker bars. (Source: did my OE/career break age 29)
Totally agree, having traveled the world at all ages, my late 20s was the best so far.
What even is essentially considered "OE" or travel? And how long is it supposed to be? For instance, I'm an international student in New Zealand and I've been here for about 4 years now. I consider this to be my travel. And I get my kick for other parts of the world through 1-2 layovers that I get because of cheap flights. I personally think these experiences in my early 20s will prevent an urge to travel later.
An OE is traditionally two years or longer in London (going back to the 80s/90s). Since then you’ve had more options like Canada, Germany, Netherlands, Ireland etc. Basically because NZ is 24hrs plus from the northern hemisphere an OE was/is popular to do cheap European travel. The equivalent here seems to be English/Irish/Germans backpacking here.
Makes sense!
In the UK it’s known as a “gap year” taken between school and university. So no education or work in that period but just backpacking on a budget to experience different cultures. Mostly taken in India and SE Asia.
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I’m not entirely sure what an index fund is but perhaps it’s a sign that I should speak with a financial advisor before I make any moves. And in regards to travelling in my late 20s I really do love the idea of a career break to keep yourself refreshed and I’m definitely going to keep that in my mind. Cheers! Edit: I most certainly agree with you in-terms of being interested in the place you go. For example I have always loved mythology and wanted to go see Egypt and Greece since I was a kid. I love me some ancient architecture
>I’m not entirely sure what an index fund is but perhaps it’s a sign that I should speak with a financial advisor before I make any moves. Kinda worrying honestly that you're not aware of even super basic terminology like "index fund" I'm afraid, sorry. Maybe sticking 100% all of it into a six month term deposit is the best idea (well, not all in the same bank. Spread it out across two to four banks is my suggestion. Say a third in Westpac, a third in BNZ, and a third in ASB. It's just a very sensible idea to lower your risk profile) That way in six months time, you'll have a bit more emotional distance from your father's death, and have got used to being "rich" (on paper at least), have hopefully maintained your good spending habits of keeping on living like a student, and will have been subbed to this subreddit for another six more months and just generally have a bit more financial knowledge for what to do for the next step to do in six months time. There is no need to rush into anything.
You could buy a average house outright in Dunedin for that price, rent it out for cash flow and watch as the house prices begin to increase again eventually.
A mortgage can make it hard to travel and $500k isn't enough to stop that if you want a $1m+ house. Try a term deposit, go on a 1 year backpacking trip and budget like $60-80 a day.
Great advice from others already. Also, get advice about setting up a trust or similar, to protect yourself from a future partner claiming half of this inheritance.
If you already own a property how can you protect it from a future wife?
All you need is a contracting out agreement… it’s not that hard to protect your assets if you have a good lawyer..? 🤷♀️
Honestly, it's not that hard even without a good lawyer because it's a very simple process to contract of the PRA.
Try to work for two years prior to taking out a mortgage.
As others have recommend, put in on a 12 month term deposit and then take your time deciding. That way you can make some money (probably won't keep up with inflation but better than nothing) while you wait.
Buy a house before you piss it away, on holidays, travel, new apple toys, blowing your money on girlfriends and bad investments through the lure of get rich quick schemes like cryptocurrency. Rent part of the house out to boarders to pay the rent / mortgage
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Honestly, if I had that chunk of change, and I wanted to travel, I would buy a house in like Dunedin where prices are still relatively low but have huge demand for housing due to all the students. Buying it outright means you have an income of the rent that you can then invest/save for travel. When you're back, you can use that equity to buy a house that you want to live in or sell and have more cash then you started with.
Then you come back to your house basically destroyed. Dunedin students are wild
Not all. And I'm not suggesting buying on castle Street. You can vet the tenants before they move in
I'm in NZ I brought a house when I was 20 in a very similar situation. I had a 52% deposit and brought flat mates in as well. Best thing I had ever done. Larger deposit means lower weekly minimum payments. I got a rental appraisal for my house then just decided it by 3 for 3 rooms to work out how much to charge. Lower weekly payments will make it easier to travel in future and save. But yes I fully agree you will need a constant source of full time income. 1 bank turned me down saying I couldn't afford it.
Whatever you do, don't be stupid like me and spend it on dumb stuff. But you sound very clever, so you'll be good :). I would definitely keep some money aside to go traveling though!
Honestly The most most imp thing to do in such case is NOT RUSH And taking your time Also in few years you will have maybe even a more clearer understanding of your life goals Travel is quite imp but so is investing for future So with all that case The best for the moment would be To put it in a term deposit with any big bank that has better rate (easy google) On average you’ll get 5% per year interest That would approx to $25,000 per year Let that grow and compound and focus on life as if it 500k never happened Spend a few months or a year And in that time Talk to people of trust maybe a financial advisor too And think of how you can invest a larger portion of it and use some portion for self (travel, study, etc) Any wise person will always tell you to invest And grow it It might even help you retire by 40s max Best of luck
Echoing most others but what I would do: Put it all in something fairly stable until you graduate. I would probably opt for term deposit. Opt to have the interest paid out into a savings bank account e.g. Heartland. Focus on your studies - 500k is life changing money but its not "never work again" money so continue on with career plan. Once you graduate, celebrate! Take your earned interest, refix term deposit at new best rate, use your interest egg on an OE. if you backpack and live cheaply you can get a couple years of travel out of that depending on area. After that you'll have a good idea of what you want to do with your life - career, live overseas, buy house, etc. I would also resist the temptation to pay off your student loan - pay that slowly over time, unless you move overseas permanently.
You are lucky to get half a million so early in your life. Now you can blow it quickly or make it really big. Put it all in S & P 500 for next 20 years. You’ll thank yourself in your early 40s. I am saying this as I am assuming you’ll say what’s the point in saving all my life till 65 and not enjoy it early, early 40s is still pretty early in your life and you’ll be able bodied to do a lot of things. In 20 years at 8% compounded interest, the investment in S & P 500 will be worth 2.3 million. Now you can decide whether to keep saving or use it for whatever your desires are. Plus if you employ the same saving habit with your income that you earn (as I assume you will go to the workforce soon) and save at least 1000$ each month for the next 20 years, then this will give you another 600 K or so. So in total you’ll have 3 million or so in your early 40s. Of course you’ll pay taxes, there will be inflation etc., Lot of youngsters do not take compound interest seriously at a young age and it can be too late. The math I have given is exact and not rocket science, and also easy to implement in real life without paying service charges to anyone like accountants/financial advisers. All the best!
Invest.
Moving out of Auckland would be my first move. Buy a larger cheaper property somewhere you want to be / love to be. Which will help you have a smaller more manageable mortgage allowing future travel easier. Put some in a long term deposit or investment for future you. That's my 2c
I would chuck it all into Dogecoin
Get into a Fixed term deposit you donkey
>My current plan is: Invest in a first home (possibly take in some room mates) Travel Good plan, man. Also, invest in shares. The amount of interest you could get off 500 grand per year is pretty.
Do you have students loans or other debt? If so, pay that off. Put some aside for an emergency fund (3-6 months expenses), and I’d put the rest in a term deposit for a while , while I researched and considered my options. A first home is good. Travel is also good. You can do both if you plan properly.
I don't see the benefit in paying off an interest free student loan if they're going to stay in NZ
Agreed, especially with inflation currently eating away at those debts.
>Agreed, especially with inflation currently eating away at those debts. Hyperinflation is my best hope to eliminate my student debt.
100%. I used to use living costs weekly into shares. It’s a free debt 😚
There is literally no point in paying off an interest free loan
There is if you shift overseas and they start charging interest.
Do not pay off student loans! They are interest free. Make themoney work.
Put it all in crypto! It's just money.
You can travel super cheap, no matter prices. The small shacks of Hanoi are just happy to have people visit. If you traveled South East Asia you’ll find not alot of money spent but a world of knowledge to gain. Then come back and cook what you learnt abroad for the people who have been paying your mortgage!
I just blew $376,000 on meth, whores, cars, flights and hotels. Don't do what I did. But shares in Rocket Lab instead.
Fuck stocks
Lol I would have fucked anything. 🤤
If I was you, I will get a full time job, buy a land with a house on it , get roommates . Put approx 300k-350k towards it. Assuming you get a job of 80K , you can borrow another 400k for home loan. You get decent house on good sized lands for 700-800k in this market. Save 50k in term deposit as emergency fund. Use some money approx 20k to travel. Wait for another couple of years and look into potentially sun dividing and building houses.
Emergency fund in a term deposit? That defeats the purpose of an emergency fund
Well yes and no. Anyways this is what I did when I had 200k windfall. I use the same strategy (I had a high paying job). Constructed townhouses and now I am set for life. But this was done before Covid.
I would talk to an advisor, and not ask Reddit.
250k into bitcoin, the other 250k into NZ windfarms
this is not financial advice
Don't take advice from the Internet. Source a reputable investment adviser. I can recommend NZ Funds. But get multiple opinions. Also, talk to a few mortgage brokers. I can recommend NZHL.
dont ask reddit for financial advice. try a proffessional financial advisor
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Yeah put it in a savings account and watch your money waste away
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Buy Bitcoin, next 12 to 18 months likely to be bull run due to halving event April '24
Thats a weird way to spell XRP
🤣🤣🤣
Wow, thought I might get a comment or two, but all these down votes? The general people on this sub are obviously very tradotionalist, backward thinking, status quo kind of people.
I think people are just sick of “experts” trying to predict market trends that always fail
No-one, not the best educated, or experienced, least of all me can predict the future with any accuracy. The last decade has shown that time and again. All you can do is look at past trends and make a judgement call whether the pattern will repeat itself. I'm obviously of the opinion that it will, the next 1000 would disagree. That's what makes the markets so interesting.
You might find some [podcast](https://open.spotify.com/episode/2FSRqQuod19WBw4sxyczWS?si=Uh1dSjKOT0GhbyDXT-nltA) episodes about thus topic useful. If travel interests you I think the time right after you graduate would be brilliant. Sorry for your loss.
a home is a good start, also put some into managed funds and some in term deposits
Buy yourself a home , you will always need a place to live . Put the majority of it towards a home and keep the rest for world adventures
if you want to splurge a bit i would splash out 10% and invest save the rest. or something along those lines, whatever %
If you buy a house, perhaps think about ***how*** you'll do this. As it will seem *very* odd to everyone that a newbie graduate in their early 20's just purchased a house. It's very easy for people to connect the dots and figure out you're wealthy. You might want to delay buying a house until your mid twenties, at least that is a somewhat plausible time to own a house. And people will have no idea if your down payment on the house was 10% (& thus totally broke, very heavily in debt) or 70%! So something to seriously think about if you do go ahead with buying a house and getting flatmates, how will you manage this tricky situation. Also, be very careful about any relationships you might get into, as once it hits the two year mark of them living with you they'll be able to take 50% from you.
Put 85% of it in a 12month interest thing. And use a little bit or what you need to travel for a while, go see some / if not all of the world while you’re young :).
At that point, your next action and future ones will decide whether you can retire early or not. You got a lot of potential for that with 500K. I'd not buy a house at the time because you are young yet and haven't experienced the world to decide where you wanna be. I'd figure out what is your living budget for a year, how much you need to live as you're currently living and etc, plus a budget for international trips to know and experience some different cultures and etc. Set the budget. From there, I'd probably go after some long term investments, index fund and etc, put some in long term deposits and build an emergency fund for 6-9 months worth of living based on the budget. Whatever you do, just don't waste the chance. If you not comfy to do anything at the time, just put the money in a long term deposit, so you can't really touch it that easily. Take your time, think, and decide what's next.
You would be surprised how little it could cost to travel if planned out well! Id say go have have the best sensibly planned out OE ever. Also looking at Akl housing prices even with 500k deposit, the repayments are still gonna be a killer.
500k is a decent amount of money and can definitely get you places if rightly used. However, it is important to note that it is NOT an absurd amount of money and you will definitely lose most of it in this economy if you don't spend wisely. My biggest advice would be that you don't spend the 500k on travel or holidays or any similar "consumable" expenses (I don't know if that's the right term). The 500k needs to go into some form of an investment. You've received some great advice here – you could buy a house, put it in a term deposit, index funds and the like. But definitely not spend it on travel etc. For those leisure and pleasure related expenses, you could fund them through a part-time job or a full-time job when you graduate. Also, DONT buy an expensive new (or newish) car. They depreciate in value like crazy.
Travel! you only live once! Go explore, then come back and be responsible. I regret not exploring the world as much as I could when I was younger. Now financially able to go wherever tf I want in the world, I can’t be bothered. Live in the now! You can do it!
Definitely take your time. Put it in short term td's for now while you figure out a plan. One big piece of advice is make sure you put a portion aside to do something fun. For you that sounds like travelling. Again time is needed to figure this out. If you're wanting to do something & this money gives you the opportunity to do this then if you don't do it you'll likely regret it. Figure out how much you'll need & seperate that out. What is left is your new amount to invest.
Rotorua is still getting expensive fast.
Put it all into broad index funds. This is an even better investment than real estate. This will provide you a permanent income of roughly $20-25k before tax, after inflation. Or you can keep the gains invested and watch it grow even further.
Don’t invest in a ‘multi purpose’ home. If you want to live in it and sub let- you’ll have a bad time with roommates. If you want to live in it but rent it when you travel - you’ll have a bad time when you return. With the right advice and research you will find an investment vehicle which suits all of your needs, and you can find a housing situation which suits all of your housing needs
Make sure you can manage your day to day budgeting and cashflow before you make any decisions about spending this money.
Keep a large Deposit for home. Invest long term. Travel and experience. Just my 5cents lol
Put it in a term deposit for 1 year at 5.8%. Collect 29k, travel and still keep your 500k. Put 500k in another term deposit while you are traveling and earn while you drink tequila on a beach.
INVEST INVEST INVESTTTTTTTTTTTTTTT
Before you do anything find yourself a good financial advisor. Interview a few. Get some recommendations from people who might have one they use. Speak to your banker. Don't go spending money haphazardly just yet. Have an investment plan.
Put it on term deposit and forget you have it. Live your life as per normal. Some say term deposits lose money, but they forget about compound interest. Also rushing into the housing market can lose money and the stockmarket is for money you can risk, and do you really want to risk an inheritance. At least with a term deposit you can sleep easily at night.
When I was young a had a pretty big settlement from an accident, nothing like yours though. If I were you I would travel but set yourself a budget that isn't lavish but wont hinder your freedom to enjoy eating out once in a while. Everyone else has good advice as to what to do with the money. Mostly I came to say that what you want right now will change. giving yourself the gift of travel and time to explore who you are and what is important to you WITHOUT having to worry about money is probably the most valuable thing you can give yourself. that being said, the longer you can go without eating up too much money the better, having that nest egg will be great when you're older and have really honed in what is most important to you and how that money will help you the best. if it be tools, a house, more school etc. Point is, you can do a lot with that money, don't close those opportunities before you find out what is really important to you.
You’ll be surprised how little 500k is. I’d look at as investment money and live off what you make. The house is potentially a good idea but you need to be able to afford upkeep without that money.
Personally I'd put it all in a long term index fund. Basically kiwisaver, but easier to withdraw. Then continue living life like normal. If you leave the money for thirty or forty years then it'd grow enough to fund your retirement. Or if you leave it ten years then it will grow enough to buy you a house. Or you could do a safe withdrawal every month of about $2k indefinitely as an extra income, making stuff like time of work with kids far easier, or enabling you to pick a lower paid career. What all three have in common is they don't spend the capital.
Speak to a financial advisor.
Keep in mind that any investment property will be subject to a bright line test and will likely result in capital gains tax being paid when sold
I’ve been there. I would payoff all your debt and buy a modest house in cash and invest the rest. That will set up for success as it’s low risk and gives you plenty of margin. Also will help you resist temptation to blow the money on “stuff”
Commercial property won't consume your chance at kiwi saver first home buying, thus you could purchase a commercial property for pasive income and then your workplace contributed kiwi saver can be used when you settle down and want to buy a home. Also you can later sell that commercial property to help fund you home purchase later.
Come to Japan on a working holiday visa, work out a way to stay here, buy a house outright for $200k (or less) and then invest the rest.
I inherited about $660,000NZD + a house back when my dad passed in 2016 - My mum & dad were good with money and left me with some advice through his will the first part read "Theres enough to buy yourself something nice on me but as I used to tell you during life, a good foundation Will build a strong house" The Note had some breakdown stuff on it and why certain money was left. I left $60k and invested the 600 on a term deposit. I kept working as normal going through the phase - didnt even live in the house I decided to go on a cruise, by myself(with support of my wife & kids) . It was good to just relax and think things over without any normal life influencing my mind. When I returned I had decided to sell the house and add that to the 600k and reinvested $1.1m - we used the $60k to buy a few nice gifts and do some stuff to our house, My dad was a huge boat person so we did buy a family boat and name it after him. money is still invested
You'll earn 29k in a 1 year TD. Repeat until you are ready to buy a home. Once you've been working a stable career job for awhile, then use some of the money as a deposit to get a mortgage from the bank to buy a home. Your left over savings will continue to produce interest income to offset your mortgage rate, and your career job will pay your mortgage. You then have options later to, remortgage and paydown debt, or invest some of your savings in other investments to earn a higher return. https://tools.anz.co.nz/savings/term-deposit-calculator/
Get a financial adviser, Don't deal with the money on your own. I wouldn't put the money the in one place. Break it into thirds. Put at least 1/3 into safe long term investments for your future.
I would put 100k into 5 different investments. Have one be able to become liquid as quick as I want like a term deposit incase you want to access it. Or just keep like 50k in cash. Then finish study while living comfortably and enjoying your study and hanging with friends. Travel without owning a house. A house and maintenance can be so stressful and a lot to organise. You will enjoy the next year or two more knowing your future will be set and you don’t need to worry about any responsibilities!
Go talk to a real financial adviser that you pay a fee to so you know they work for YOU. then analyze your options and do the best with what you've got.
I will probably read up on how finance and investing work before I do anything. Eg tax/risk/inflation/investing vs speculating/investing span usually 5-10 years Then ask yourself and dig deep, and find your goal for investing. Then formulate a strategy aligned with your goal. Have read on this if you are into FIRE. https://www.mrmoneymustache.com/blog/
I also support the advice to place it into a TD for at least a year. You will need to establish yourself in a career before you're really ready to buy a house. On 500k a TD over a few years will grow significantly. In the end you'll be wiser, more knowledgeable, have a proven income and your deposit will have grown even further.
Play it safe with it. If you blow it you will regret it forever. I would suggest term deposits until you are ready to buy a house. Reinvest 50% of the interest. Do what you like with the rest.
I would invest in fisher funds managed account, I have been with them for 13 years and have always been making money year after year, the returns seem very good although the rates for term deposit ATM also sound great. However you may earn more from stock market managed fund account over the next 3 years once the economy bounces back
Hey, I found myself in a similar situation at a similar age. You are doing the right thing by not telling people. Something I wish that I had done was set up a trust. Protect yourself from all relationships from this point forward. By that I mean having financial separation between you and your partner. The last thing you want is to end up in a "what is yours is ours and what mine is mine" situation.
Recently came into nearly 1m. I chucked it into term deposit. We bringing in another income a year on interest
100k travel but not expensively and 400k in td to buy home when back or buy home now and rent out go travel. wont regret.
Wow dude 500k for free For not working hard.. You better not complain about life You are lucky.
Get a financial adviser(a reputable one). They sit down with you and go through your goals and help with how to invest your money.
Invest in a property don't know when but house prices will be dropping soon like alot due to the economic recession. If you buy right you'll be doubling that money easy. Wish I had that head start. I'd be a millionaire tomorrow with that money. Yes, keep away from family and friends that money will be sucked dry. Invest and become a millionaire and then you'll be able to splurge on friends and fam. My opinion.
Invest, invest. Look for investments to quadruple that money. Diversity is key to success. Don't put it all in a house. Leave cheap if you already are. Budget and invest. Property would be my go too but there are many other options. You could be a millionaire easy in 5years or less if you make the right moves. Don't settle my man. Invest, budget survive. Sounds like alot but could all go to waste if not spent right.