Investment decision - suggestions - what would you do?

Jacka87

Ok I know that I cant actually ask advice on here so its more of a what would you do, just to give me some suggestions.

Here is a summary of the savings and debts that are existing:

Debts
105k Mortgage - Tracker - Base + 2.5%
20k Loan / Second Mortgage - Tracker - Base +1%

Savings
ISA - 2.1k - 3%
Savings Account - 2k - 0%
Llyods Vantage - 7k - 4%
Current Account - 4.1k - 0%
NS & I Investment Account - about £500 - Not sure
Premium Bonds - about 1k - Luck

Further to this I am in my early 20s, planning on buying a larger home in a couple of years as I suspect I will be getting married soon enough and would like a house to bring kids up in. I do have a good FS pension tho how long that will remain is unclear.

My thoughts are to put the money from my savings and current acount into this years isa and vantage in as next years.

I also reckon NS & I savings should either be dropped into ISA or into more premium bonds as the savings rate is pretty low.

Tho I do think that investing some money in shares would be a good way to go with a small amount of the money, maybe 1-2k.

My oh is going to invest her money in the Santander regular saver for first time buyers as she hasnt been on a mortgage before.

In 1-5 years we intend on buying a house together.

Anysuggestions would be nice, what would you do?

pressuredrop_2

Inflation is 5.5%. Your cash is wasting away.

Jacka87

pressuredrop wrote: »

Inflation is 5.5%. Your cash is wasting away.

Cheers so you suggets that I just spend it all now and then cant afford a home for my family as I have nothing left as a deposit.

pressuredrop_2

Jacka87 wrote: »

Cheers so you suggets that I just spend it all now and then cant afford a home for my family as I have nothing left as a deposit.

You're missing the point.

Rollinghome

Jacka87 wrote: »

Ok I know that I cant actually ask advice on here so its more of a what would you do, just to give me some suggestions.

If you intend buying a house soon then you'd be best sticking to cash savings. If you've got a flat already and prices slide a little you might need a fair bit more for your deposit.

Equities have had a good run over the past couple of years and now don't look cheap so the next direction may as likely be down as up. If you can top up your cash ISA at 3% or more that's worth doing and then paying into another after 5 April. 3% is worth 3.75% to a basic rate tax payer.

Then you could open another Lloyds Vantage current account or two for the rest. Pays 4% on £7k currently but due to fall to 3% on £5k in a couple of months. Move everything from your non-interest current account, don't give them your money for free.

Other posters here tend not to be a fans of premium bonds and mathematically they're right. The rate paid into the premium bond prize fund is just 1.50%, equal to 1.875% as it's free of tax so although it's not stunning your flutter is still only costing about £9 a year in lost interest elsewhere.

On inflation, if houseprices are falling and you intend buying then the net inflation rate for you may be negative. Good luck.

Jacka87

pressuredrop wrote: »

You're missing the point.

Ok I realise that inflation means my savings are essentially worth less as its a larger number then the interest rate. however as i am saving for a specific objective. Spending my money on all sorts of random stuff isnt going to help me.

Do you have a practical suggestion / alternative or are you one of these people who can only point out bad news?

pressuredrop_2

Jacka87 wrote: »

Ok I realise that inflation means my savings are essentially worth less as its a larger number then the interest rate. however as i am saving for a specific objective. Spending my money on all sorts of random stuff isnt going to help me.

Do you have a practical suggestion / alternative or are you one of these people who can only point out bad news?

Q. I have cash and I'm saving for a house. What should I do?

A. Keep the cash and save for a house.

Jacka87

Rollinghome wrote: »

If you intend buying a house soon then you'd be best sticking to cash savings. If you've got a flat already and prices slide a little you might need a fair bit more for your deposit.

Equities have had a good run over the past couple of years and now don't look cheap so the next direction may as likely be down as up. If you can top up your cash ISA at 3% or more that's worth doing and then paying into another after 5 April. 3% is worth 3.75% to a basic rate tax payer.

Then you could open another Lloyds Vantage current account or two for the rest. Pays 4% on £7k currently but due to fall to 3% on £5k in a couple of months. Move everything from your non-interest current account, don't give them your money for free.

Other posters here tend not to be a fans of premium bonds and mathmatically they're right. The rate paid into the premium bond prize fund is just 1.50%, equal to 1.875% as it's free of tax so although it's not stunning your flutter is still only costing about £9 a year in lost interest elsewhere.

On inflation, if houseprices are falling then the net inflation rate for you may be negative. Good luck.

Well I agree with the move from my current account, just moved 2.5k from that to my ISA which takes me to the limit for this year (as I had to withdraw money from it earlier). the rest of the money in the current account is actually just my salary (which has just been paid in).

I pay all my spending on my credit card and then pay it off at the end of the month, so would it be worth sending my salary to a savings account and then dropping it back in before my credit card bill is due?

I am thinking of sitting my NS & I into premium bonds and treating it as a free lottery ticket. i know that its an investment but I would rather do that than putting a pound on the lottery every week.

With regards to falling prices in property, well that will prob help me. I am looking to step up so a percentage drop on my small flat is worth less cash than it is on the lovely big house I intend on buying. Tho i would be happy to sell at the price I bought in 2008, as it would remove the feeling that the property was a bad investment (tho primarily its my home!)

Jacka87

pressuredrop wrote: »

Q. I have cash and I'm saving for a house. What should I do?

A. Keep the cash and save for a house.

So your saying let it sit under the bed? Its friday and its been a tiring week. Please either give me a clear answere as to what your suggesting or just leave it.

pressuredrop_2

Jacka87 wrote: »

So your saying let it sit under the bed? Its friday and its been a tiring week. Please either give me a clear answere as to what your suggesting or just leave it.

I have left.

dunstonh

In 1-5 years we intend on buying a house together.

That basically rules out any investment option unless you are very high up the risk profile and can accept that you may have to put off the purchase date. 1-5 typically means sticking with savings.