Saving for a house deposit

cjms85

I'm 27 and currently trying to save up for a deposit on a house, but I'm probably still about 3-5 years from being in a position of a) having enough money and b) knowing where I'm going to be based after I finish my PhD. Ideally I'd like to have a lump sum of about £30k to put towards a deposit on a house (nominally 20% on £150k house).

I've currently got two fixed rate cash ISA's that are due to mature between 1st April 2014 and 1st June 2014, which should net me about £12k. I've also got an eSaver account with another £2.6k in it and I'm currently managing to save £200 per month, so by 1st April 2014, I should have managed to save another £2.6k, taking the eSaver to £5.2k. Meaning, that by the summer of 2014 I should have £17.2k.

I'm hesitant to tie up my money in a 5 year fixed rate bond/ISA at the current interest rates, as there's always a possibility the BoE may raise the base rate (but in reality thisis probably still a good 5 years away). Generally I'm risk averse, but things are getting to the point where the "risk" of an investment where your initial capital may go up and down in value, isn't that far off the "risk" of your capital being eroded by inflation in a low paying ISA.

I've obviously worked hard to accumulate the amount I've got in savings and don't want to really see this capital be reduced in actual sterling value. Are there any investments where your initial capital is secured, but your interest is gambled i.e. you invest £xx and the "risk" is associated with interest you would accrue, so that if things went badly you'd still walk away with your original lump sum after 5 years but no interest.

I'm happy splitting my savings up and diversifying, but I don't really know what would be sensible to invest in e.g. cash ISA, S&S ISA, peer-to-peer lending, metals. What other things might be worth looking into? Would I be better off investing in shares directly that a S&S ISA?

Basically, I feel that I'm in a pretty good starting position, but I don't know which direction to go in next.

Thanks for your help.
Chris

Reue

cjms85 wrote: »

. Are there any investments where your initial capital is secured, but your interest is gambled i.e. you invest £xx and the "risk" is associated with interest you would accrue, so that if things went badly you'd still walk away with your original lump sum after 5 years but no interest.

Obviously ignoring inflation:

Say you have £10,000 to invest for a time of 5 years. You want to get your £10,000 capital back at the end no matter what but gamble the potential gains.

So, you split the £10,000 into roughly £8000 into a 5year 5% fixed rate, and invest the other £2000 in shares or whatever.

After 5 years with 5% reinvested growth, the £8000 in the fixed account will be about £10000.

Your £2000 invested in shares could be anything. Alot or nothing.

Youve ended up after 5 years with £10000 back and gambled on the additional interest.

Year Capital Interest Total 1 8000 400 8400 2 8400 420 8820 3 8820 441 9261 4 9261 463.05 9724.05 5 9724.05 486.2025 10210.25

Obviously adjust for correct %s etc.