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How to best invest your money if buying your dream house isn’t an option?

3 alternative ways to spend your house deposit savings

Despite what many people say, you don’t actually need to buy your forever home to grow your wealth. 

While buying your first home (or investing in a second, or third…) can do great things for your future savings, there are plenty of other investment options for you to dapple in.

As house prices continue to skyrocket around the country, many home buyers are competing with hundreds of others to land their dream house. 

 “Newcastle is witnessing an unprecedented property boom as low-interest rates, housing demand in coastal communities and a general exodus from Sydney are leading to phenomenal price growth1.” 

Unfortunately, house prices are not finished soaring. Business Insider states that by the end of 2021, Australian house prices will soar to an average of 17%2 – and even more than that in some cities. 

For some, offering an insanely higher deposit than asked for isn’t a financially viable option. Plus, few people want to waste their hard-earned money and settle for a house that doesn’t tick all the boxes.

So, what’s the solution? 

Well, it’s likely that you still want your money to grow rather than just sit there in a savings account. There are better options to allow your money to grow and better your financial situation now and for your future.

3 alternative ways to spend your saved house deposit

1. Rentvesting

Can’t afford to buy in the area where you want to live? Rentvesting could be the answer. 

Rentvesting essentially involves renting a property to live in that’s perfect for you while also owning an investment property that fits your budget.

This strategy may seem complicated, but it may be simpler and more common than you think. 

“According to ABS figures, around 15% of private tenants are rentvestors”

Where to purchase your investment property and how to structure this arrangement all depends on your financial situation and goals as rental yield and capital growth will vary based on the property itself and location. 

The biggest benefits for rent-investors are:

  • You get to live where you want, when you want, rather than being limited by the area and type of house you can afford. 
  • Potential tax benefits: you may be able to claim some investment property expenses as tax deductions.
  • Potential capital gains: if your investment property increases in value, you will be able to sell at a profit.

2. A negatively geared investment property

Gearing simply means borrowing money to buy an asset.

Negative gearing involves:

“Borrowing money to invest where the return from the investment is less than the borrowing costs.4” – @MoneySmart.gov.au

When we think about it in terms of an investment property, this means that the rental income you will receive from your investment property will be less than the interest payments on your loan. 

Essentially, you’re making a loss.

You may be thinking a loss doesn’t sound particularly good. But there are benefits. 

According to Investopedia, “the benefit to the buyer or investor is that the shortfall between income earned and interest due can be deducted from current income taxes5”.

This means you will be minimizing the amount of tax you currently pay due to your investment property. 

Realistically, the tax benefits are only likely to last for the short term, so the end result is usually selling the property and benefiting from capital gains if the property increases in value. 

  3. A diversified investment portfolio

Your alternative option is to steer out of the property market altogether and invest instead in a diversified portfolio. 

There are plenty of other asset classes you can choose to invest in such as shares or fixed income. 

An important consideration when building your investment portfolio is to understand your risk tolerance. How much risk can you afford and are willing to take should you experience a loss in value or income?

Diversification is key to protecting your investments to ensure that the risk you take is as minimal as possible.

An experienced wealth creation financial adviser can help you determine your risk tolerance and choose the right investments to reach your money goals.

Seeking financial advice in Newcastle? 

NFPG’s experienced financial planning team is located in the heart of Newcastle, NSW. 

Our financial planners can help you make smart, informed investment decisions and build towards a future of financial freedom. Get your money working for you and start achieving your financial goals today.

Schedule an appointment with one of our financial advisers today – your first discovery meeting is complimentary. Book now: We have offices located in The Junction (NFPG), Erina (CCFPG), and Sydney CBD (SWA). 


1: Bell, M (02/03/2021) “Newcastle housing market red hot as an influx of buyers from Sydney drives up the competition.”  https://www.realestate.com.au/news/newcastle-housing-market-red-hot-as-influx-of-buyers-from-sydney-drives-up-competition/
2. Derwin, J (25/03/2021) Business Insider Australia “Australian house prices will soar 17% in 2021, according to economists. It might just force the regulator to step in and do something.” https://www.businessinsider.com.au/australia-property-prices-forecasts-anz-apra-lending-2021-3
3. Stewart, E (23/07/2019) “Ever heard of rentvesting? Meet the Australians who are both tenants and landlords.” https://www.abc.net.au/news/2019-07-23/this-single-woman-bought-a-house-with-no-hand-out-from-parents/11279302
4. www.moneysmart.gov.au
5: Kenton, W (21/05/2021) “Negative Gearing” https://www.investopedia.com/terms/n/negative_gearing.asp


DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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