Different savings strategies that can help you in the property market

Are you saving money towards a deposit for your first home or to upgrade to a new home? With historically low interest rates making a mockery of your savings account, you may be looking for new strategies to boost your funds.

“People are always trying to work out their ‘north star’, the amount of money they need to get to in order to move forward with their property goals,” says Mansour Soltani, mortgage broker and founder of Soren Financial. “We try to show them where they could be saving money or making money.”

Most savings strategies have been in play for centuries, while others, like investing in cryptocurrencies, have only been around for a decade or so. 

Here are three of the most popular strategies in play today.

Investing in the share market

The share market provides an opportunity for people to put their existing savings to work while they’re waiting to purchase property.

“There are not many options as liquid as the share market,” says Fairmont Equities managing director Michael Gable. “If you’ve got a chunk of money and you’re trying to save up to buy a house, you’ll get a better return than having your cash just sitting in the bank.”

Gable says the share market has just had its strongest year since the 1987 crash, and there have been an increased number of investors entering the market.

Easy access is one factor in the share market’s growing popularity, says Fraser Allen, CMC Markets’ head of premium client services.

CMC Markets recently launched their mobile trading app, developed to make investing in property stocks even easier.

“The share market is extremely accessible on the CMC app, and we offer free brokerage* on US stocks,” Allen says. “The smallest order you can place on the ASX is $500, so even for people who don’t have a huge amount of capital, that gives you a starting point.”

Offering almost 35,000 different instruments on the platform, including a range of property-style stocks, managed funds, and exchange-traded funds, CMC Markets gives investors plenty of choices to suit a range of risk profiles, says Allen.

“If someone wants to boost their savings, allocating a portion to stocks could benefit them.”

To protect your savings from potentially volatile markets, Allen suggests diversifying across different sectors and geographical locations. He also encourages investors to take advantage of CMC Markets’ educational material, which provides guidance on how to exit stocks and updates on what’s happening in the market.

Reduce your expenses

From selling the car and making better use of public transport to giving up a coffee-a-day habit, there are lots of ways you can reduce your weekly expenses and filter more money through to your savings account. 

Moving back home with parents is a popular way to cut expenses, says Soltani.

“People in their early 20s are still at home, and those in their late 20s and early 30s have moved back home and are just trying to save as much as they can,” says Soltani. 

You can also limit your spending by following in the footsteps of business magnate, investor and philanthropist Warren Buffet who reportedly said, “Do not save what is left after spending; instead, spend what is left after saving”.

This is a great budgeting approach for anyone saving for a home deposit. 

Soltani says one way to stick to a savings plan is to have your employer deposit an agreed amount of each pay directly into a dedicated savings account with no keycard attached.

A second income

For those with the time and energy, taking on a second job could be an option, if only in the short term. This will create a new income stream, but it also has the added benefit of giving you less free time to spend the money you earn.

Some employees pick up extra hours in their current job; some look for part-time work to fit in around their main role, and others target weekend work.

Soltani says many of his clients work two jobs, and a handful go so far as to take on a third job to boost their earnings to save more money and more quickly.

*Limited to one buy order under $1,000 per stock per trading day for Australian shares. Seek independent advice and consider the relevant T&Cs at cmcmarkets.com.au when deciding whether to invest in CMC Markets products. Please refer to our Financial Services Guide. CMC Markets Stockbroking Limited (ABN 69 081 002 851 AFSL No. 246381). FX Spreads apply to international orders.

©2022 CMC Markets Stockbroking Limited (ABN 69 081 002 851 AFS Licence No. 246381), Participant of the ASX Group (Australian Securities Exchange), SSX (Sydney Stock Exchange) and Cboe (previously known as Chi-X), provides the financial products and/or services. It’s important for you to consider the relevant Terms and Conditions and any other relevant CMC Markets documents before you decide whether or not to acquire any of the financial products. FX spreads apply to international orders. Please also refer to our Financial Services Guide containing details of our fees and charges and, if applicable, our Target Market Determination for Exchange Traded Options. All of these documents are available at http://cmcmarkets.com.au.