As always, totally depends on your individual circumstance – but here are my two cents.

I would consider business as the number one option but only if i had a good idea and a way of getting enough extra start-up capital. It is definitely the riskiest option but the lessons you learn even in a failed business of your own are invaluable. Plus, if you are in the tiny minority who actually succeed business-wise on your first go (or second go…or third go……) then the potential for earnings far eclipses shares or property. Generally though, it is not a great economic climate to be starting a business.

This current period seems like a golden opportunity to invest in either shares or property. No one knows if we have hit the bottom yet though and with the recent official confirmation we are heading into a recession, plus unemployment forecast to hit 7% later this year it is quite possible that both shares and property have further to fall. It is tempting to say that with a long term view that you can’t really lose, however I personally believe it means there is just no reason to rush into anything as the turnaround is not yet upon us. It is worth keeping an eye out for bargains and seeing how things play out over the next 6-12 months.

Property or shares? As you only have a small amount of cash to play with, if you can get a big enough mortgage from the bank I like the property option. The reason being simply that you are leveraging your money for higher potential earnings. For example, $12k in shares is only $2,400 even if you make an extremely good return of 20%. If you buy a $300k apartment, even a 5% rise is worth $15k. With low interest rates, very high rents and flat or falling prices, if you can find a bargain property, especially things like a forced sale, you could be on to something good.

But – you need to ensure it is either positively geared, or you have enough earnings (that are also stable) to cover the payments. Plus you also need to think about whether you will want access to your cash for anything in the near future as once it’s in property it’s much harder to access than just by selling a few shares.

Without really knowing your specific details, I like the idea of putting your cash in a high interest account and trying to add to it while becoming familiar with the property markets so you are ready to strike when you see the right place for the right price…

James.

p.s. being that i’m not a financial adviser or property expert, take this advice with a grain of salt. I’m interested to see what other people have to say too.