Received $50k as DINKs. What would you do?

[kiddo2014]

Hi all. I've seen heaps of these posts on the sub and before anyone asks, yes, I've read them—everyone's in a different situation though, and I'm keen to hear what you'd do if you were me. So, obligatory 'I just received $50k, ideas?' post.

My wife (30F) and I (28F) purchased a house last year and have $829K left on the mortgage at 6.07%. We have $30k parked in an offset account and have just received $20k from family.

Our combined income is $200k. Wife has a stable, permanent job. I'm on fixed-term contracts as an academic (e.g., rolling basis every 3–5 years) but am confident I'd never be out of work for a long period of time. Aside from the mortgage, our only other debt is my wife's HECS.

One option is to have $25k sitting in our offset as an emergency fund and put the remaining $25k in an ETF tracking the S&P 500. Neither of us have invested before, would really appreciate any advice.

What would you do? Thanks in advance!

inb4 hookers and blow

EDIT: Thanks everyone, offset it is. Easy.

 

[skepi22]

@kiddo2014 Personally I'd just put it all in the offset

 

[jimd]

@skepi22 Same here, good if anything happens

 

[christy_aldridge]

@skepi22 In addition to the financial benefit, based on OPs numbers this will increase their emergency fund significantly and allow them better sleep at night.

 

[mashilts]

@skepi22 Good thing about the offset. If you're saving 5% interest, that's as good as earning 7-10% before it's taxed.

 

[metrofather]

@skepi22 Guaranteed after tax return

 

[neogaia777]

@kiddo2014 It depends on your risk profile and how long you want to invest the money. Remember, money in an offset is a guaranteed net after-tax return of whatever your interest rate is. To invest the money you really wouldn't want to touch it for at least a good 5 to 7 years.

$25,000 emergency fund is only 5 months worth of mortgage repayments and only 10 ish percent of your annual income. I would reassess whether this is enough when considering potential emergency repairs to the house, what income protection waiting period you have (if you have it) etc.

If you still want to invest there are ways to do it more tax efficiently like debt recycling

 

[larissaleeper]

@kiddo2014 Offset and leave it there. Maybe a small home improvement for efficiency or liveability.

 

[stewy0042]

@kiddo2014 I personally think that when you come into a chunk of money you weren’t expecting and if you aren’t drowning in bills to do the following…

1. Buy something you need that you’ve been putting off - like an appliance you’ve been needing to upgrade, new tyres on the car etc
2. Buy something you want - max $1,000 - take a trip somewhere for a night or two, got and get spa package, some new clothes etc
3. Save the rest.

I’ve also seen this mentioned as “making an upgrade, making a memory, and making a rainy day easier”.

 

[imaninicolexoxo]

@stewy0042 They make 200k combined.

As former DINKs purchases under 1k were just made immediately if needed.

 

[revealed09]

@imaninicolexoxo Only if they’re good with money.

 

[imaninicolexoxo]

@revealed09 If they weren't they wouldn't have an offset id imagine.

 

[jacobsalad]

@imaninicolexoxo “I wish there was a way to know you're in the good old days before you've actually left them.”

Andy Bernard