Alternative investments that don't cost a fortune

Alternative investments that don't cost a fortune
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If you have a bit of spare cash and it’s not enough for a deposit on a home but it’s too much to leave gathering dust in a bank account, why not think about the stock market?

Historically, the stock market offers comparable returns to property while requiring far less cash up front. You can start investing in shares with, say, $1000, and build on that. It’s a lot less than what you would need to buy property.

In addition to requiring much lower up-front costs, stock-market investing is more flexible when you want to sell all or part of your shares. Disposing of share assets is also a lot less expensive and time-consuming than selling real estate.

Despite the current fluctuations of the share market, there are still healthy returns to be had, provided you seek out expert advice and don’t bank on getting rich quickly.

At this point it’s important to emphasise that the value of shares and funds tends to be much more volatile than that of property. Short-term investment over, say, just a few months, may reap rewards but by the same token may also see your investments fall sharply. As a general rule, the longer you are able, or prepared, to remain invested in the stock market, the better your prospect of getting returns that outperform interest rates offered by savings accounts. These investments should ideally be made with an intention to remain invested for a minimum of two years or more – in that respect little different to buying a property.

Many people use margin loans as a means of growing their investment portfolio. A margin loan is essentially a custom product designed for borrowers who intend using the money to buy shares. A margin loan can be viewed as allowing quick entry into the investment market and thus, having your money working for you instantly rather than toiling away and saving for that ever-elusive deposit on a home.

While the great Australian dream remains the goal for many, each interest rate rise impacts significantly on mortgage affordability. Prudent investing in the stock market with the help of a margin loan may be worth considering.

How do I compare margin loans? allows you to shop around for margin loans, as well as most other financial products. You can use expert comparative data from Canstar, Australia’s leading financial research and ratings firm. Canstar has analysed and evaluated hundreds of financial products to award five stars to only the very best. The Canstar star ratings go much further than just looking at interest rates. They also take into account important features so you can be confident you are getting a great product.