UPDATE - cut to my most recent post at the bottom of the page for the shorter, updated version of my current situation. (Blue writing)
Hi everyone,
I am 26 years old and live in Melbourne, Australia. For most of my life so far I haven't really given enough thought to money, and I am just starting to understand it better now. I love this website and all the tips on living frugally, and am taking much on board. My goal is probably the same as everyone here - eventual financial freedom.
I am to receive an inheritance of 150K from my grandmother who sadly passed away last year. My income is rather low (see below for details) and this is by far the largest asset I will own, so I want to invest it as wisely as possible.
There is the directive in the will that 100K of it be used to "go towards my first house." The other 50K is free to do with what I choose, as long as it's some sort of investment. There is also a family trust in my family that will provide me with 100K "towards my first house." So my parents are suggesting this - that I find a house for 250K and invest in it. Either to live in, or find a rental property.
However this worries me somewhat, as it seems like I'm putting all my eggs in one basket. The housing market in Australian cities is apparently at some of the highest prices in the world. I'm worried that if my entire inheritance is put into the real estate, and it goes down, I will lose pretty much everything.
At this stage, my plan would be this - invest 150-200K in a tiny amount of real estate, if I can find something. A single tiny apartment in or near the city, or a small house in the outer suburbs, or a house in a smaller town in my state. And then invest the rest into index funds, stocks, bonds, etc. to give me a little bit of diversity.
Or is it simply a good idea to try to buy a house for 250K, and thus have an asset and start receiving rental income?
My parents have told me this - simply just buy a house. However in my case, with my income much lower than theirs and no other assets, I am quite concerned about the "all the eggs in one basket" scenario.
Any advice would be greatly appreciated
Other info:
- I am a musician fresh out of Uni (I started Uni later than most) and at this stage my income is around 20-30,000 a year.
- I have no debts.
- I don't really want buy something more than 250K and thus have a mortgage and my parents seem to agree with me on that.
- I pay around 8,000 a year in rent, but live in pretty much the best and most central area of the city, which helps a lot with music work.
- I have a small car worth around 8-10,000 that I own, and use for transporting musical gear to gigs etc.
- I am obviously looking to increase my income as much as I can, but for now, that's what I'm earning.
- If I could help it, I don't really want to move at the moment - my house is a great deal, a wonderful location and incredibly close to everything I need, including my work which takes me around the CBD and inner suburbs.
EDIT - changed my income to a more accurate estimate