3 Year Investment... What to Choose?

[ENP]

I have a $30,000 student loan.

I want to pay this off in a lump sum in 3 years time. I have regular savings of roughly $10,000 per year.

I'm wanting to know which would be the best investment for me?

- term deposits
- smart shares (fonz or tenz)

I don't mind a bit of risk, I also don't want big entry and exit fees.

[CJ]

Why do you want to pay it off. Provided you stay an NZ resident, it is interest free. Or are you planing on going overseas in 3 years?

Term deposits are safe
my kiwi saver is in smart shares and the unit price has never been above its starting value (except the first few weeks) - i have been as termed in the business - averaging down!. While that has been a bad period, do you want to risk that when you have a short timeframe.

I here copper has down well recently, why not buy copper futures

[ENP]

Why do you want to pay it off. Provided you stay an NZ resident, it is interest free. Or are you planing on going overseas in 3 years?

Term deposits are safe
my kiwi saver is in smart shares and the unit price has never been above its starting value (except the first few weeks) - i have been as termed in the business - averaging down!. While that has been a bad period, do you want to risk that when you have a short timeframe.

I here copper has down well recently, why not buy copper futures

Yes planning to go overseas, also want it out of the way so I can get on with life. Well with term deposits over 3 years it's not like I'll make my fortune, higher risk, higher return for the smart shares?

Also the 10% discount when paying off lump sums. And copper futures? haha no thank you!!

[CJ]

And copper futures? haha no thank you!!

[ENP]

It's not the fact that they don't have good returns, it's just that I have no interest in them really.

I'm beginning to think either term depsoits or maybe corporate bonds since it's only a short term thing.

[Niall]

I have a $30,000 student loan.

I want to pay this off in a lump sum in 3 years time. I have regular savings of roughly $10,000 per year.

I'm wanting to know which would be the best investment for me?

- term deposits
- smart shares (fonz or tenz)

I don't mind a bit of risk, I also don't want big entry and exit fees.

ENP,

You owe $30k. You want to have it paid off in 3 years.

Each year you save $10k. Why complicate things? Pay this 10k, off the 30k debt each year as you save it. In 3 years the debt is gone.

All the best,

Niall

[sarahd]

Do you have the $10,000 now, and will slowly save it up i.e. will you be making regular deposits?

If you are making regular deposits, then a term deposit won't suit.

Why don't you go into an Australian shares managed fund...some of them have done 15% over the last 5 years and you can make regular deposits into the managed funds.

But with a 3 year time frame this is risky.

[ENP]

Do you have the $10,000 now, and will slowly save it up i.e. will you be making regular deposits?

If you are making regular deposits, then a term deposit won't suit.

Why don't you go into an Australian shares managed fund...some of them have done 15% over the last 5 years and you can make regular deposits into the managed funds.

But with a 3 year time frame this is risky.

Regular deposits of $200 per week. Don't know about the management funds because they would be costly to enter and exit.

Maybe thinking about art prints ranging from $2000-$5000?

[sarahd]

You are wrong about managed funds. I would check them out before dismissing them. Art prints = speculation not investment!

[ENP]

Do you mean these types of managed funds?

http://www.fundsource.co.nz/FindAFund.asp

[ZimbabweanKiwi]

Do you mean these types of managed funds?

http://www.fundsource.co.nz/FindAFund.asp

You can do managed funds through Raboplus it's a lot cheaper - last year they had a promo where Entry Fees were 0%.

But be warned - a poor choice of fund will burn you. The men in stripped suits still clip the ticket even when they make a loss. Ideally, you only want to use managed funds if your time horizon is > 5 years, otherwise just put your money in the bank - after factoring risk, tax and inflation you will probably break even.

[sarahd]

Yes, a unit trust.

I suggested Australian shares as if you want shares, I think the Australian market has held up better, and may do in the future. But 3 years is a short time frame for shares - should really be in for 7-10 years.

If you don't want to take the risk, you could consider a unit trust that invests in corporate bonds (fixed interest). That way you can invest in relatively low risk investments, but pay in monthly.

Fees are about 1-2%p.a. depending upon the provider. Entry and exit fees also depend upon the provider.

[ENP]

You can do managed funds through Raboplus it's a lot cheaper - last year they had a promo where Entry Fees were 0%.

Wow these Raboplus ones look interesting...

[PC]

Is 3yrs a long enough time frame for share investing?

Perhaps a fund invested in corporate bonds.
Or just a Rabo cash account.

Preferably elegable for the PIE tax loop hole (not available to small property investments for some reason).

[ENP]

Is 3yrs a long enough time frame for share investing?

Perhaps a fund invested in corporate bonds.
Or just a Rabo cash account.

Preferably elegable for the PIE tax loop hole (not available to small property investments for some reason).

The thing is that I'll be saving/investing regularly with about $150-200 per week going into them, so lump sum type investments like term deposits may not be so good...