Ask Paul: Where should I save my deposit for my first house?

Q. I'm a 31-year-old single female with no savings or investments.

I have no debts and own my car.

I have been a low-income earner for quite some time and have only had enough to make ends meet.

But I have just started a permanent job earning $61,214 a year before tax. My super contributions are the standard 9.5% and I have a total of $48,000 in my QSuper fund.

My current expenses are $250 a week. In the new job, I have an abundance of extra money. I want to be sensible with it and want to start putting some away for retirement but also want to buy my first house.

I want to buy in the Brisbane area for around $350,000 but am unsure whether to start saving my money and putting it into a term deposit or whether to invest in shares and cash them in when I am about to buy.

I am aiming to buy as soon as I can but would need at least 20% to avoid having to pay mortgage lenders insurance. Or do I hold off and rent? I would be looking at $250 a week, at least, and see this as wasted money. - Rachel

A. I also remember going from my part-time university bar job into a full-time job and being astounded at how much money I had each fortnight.

But it is really easy to get used to spending it, so I am in strong agreement that you lock in your capacity to save.

With expenses of around $250 a week and potential rent of another $250 a week, you will still be able to save some $25,000 a year.

This will quickly build into a 20% deposit.

If the market was booming, you may well worry about falling behind rising prices but this is not a concern at present. Brisbane prices, like those in most of our big cities, are pretty weak at the moment and likely to remain so for some time.

This really suits savers, so my advice is to get stuck into building a deposit for your first house.

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