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Where will $10k get the best returns in 2017?

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From the 1st of January, your pension income could be drastically reduced. How can you avoid this, or find an alternative source of income?

Investment tends to be a weak point among Australians. According to the Financial Literacy Foundation, we are significantly less confident with making investments than we are with budgeting or saving. In fact, 66 per cent of us do not even think about both risk and return when investing in something. 

It can be difficult to understand the returns we get from specific investments, but it's worth looking into. As an example, let's see what the returns over 12 months could be for a $10,000 investment. 

1. Superannuation

With a super fund, you don't get direct control of the exact investments that are made, but you do have a general degree of control regarding whether you want a high-risk high-reward fund or a safer option. Super Guide regularly updates with the best-performing funds, which is a good benchmark for what you could expect to see out of this investment.

Over the year to June 30, 2016, the best returns on a balanced super fund were 7 per cent."

Over the year to June 30, 2016, the best returns on a balanced super fund were up to 7 per cent*, with the rest of the top 10 ranging between 5.91 per cent and 4.45 per cent. This suggests that over 2017, you may reasonably expect around 4 per cent returns, or $400 in our example. However, superannuation is a long-term strategy, and over time the benefits will grow. 

2. Term deposits

Term deposits are generally recognised as an incredibly safe investment, albeit one with lower rates of return than other opportunities for growing wealth. As of November 24, Canstar aggregated rates of return across most term deposits between 2.9 per cent and 3.7 per cent.Term Deposits

If this was to remain steady in 2017, returns would be anywhere between $290 and $370 over 12 months. It may not seem like much, but it adds up - especially if you invest more. 

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3. Property

This is a more difficult investment to gauge returns on. For one, with $10,000 your investment options are extremely limited, even with a home loan deposit as little as 5 per cent. In this climate, properties at $200,000 are often in areas that are not conducive to significant growth. 

property

If you have only $10,000 to invest on property, your options are limited.

For example, realestate.com.au listings at this price point are in Gympie and New Auckland in Queensland, with 0.6 and -3.1 per cent returns respectively. However, if you can put together a financial plan to invest in property in growth areas, returns can stretch well into double digits.

Of course, $10,000 is an arbitrary figure, and everyone is going to have different wants and needs for their investments. To make sure you get something that suits you, it is vital to employ professional financial advice

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The information presented is general in nature and does not take into account your personal goals and objectives. This information does not represent financial product advice. You should always seek independent legal and financial advice before making a decision in relation to a financial product. Read the Product Disclosure Statement (PDS) before making a decision.

*Superratings. 2016. Super Ratings.  Available at: http://www.superratings.com.au/media/mediarelease/250816.