Would it be worth investing money for house deposit?

concrete_kid

I'm in the process of saving for a house deposit, but it seems such a waste having it stuck away in a savings account earning little interest.

I've done some research and would consider something like Invesco perpetual income fund as it has a good reputation and is medium risk.


I would put in a 2k lump sum then drip feed £300 per month.

I hope to buy a house in 5-7 years and am not risk averse.

What are the pros and cons to this idea?

opinions4u

If your capital value falls and house prices rise, you're stuffed.

A_Flock_Of_Sheep

No way. I am a risky Ewe and have been gambling with the Nikkei and FTSE and Turkish stock markets. I am also a mean Poker player. Today on the stock markets was a lesson for me.

I really strongly suggest you don't contemplate what you're thinking and delete it from your mind. IP income and high income are not to be toyed with but respected for what they are intended for. In my view gambling your house deposit on these funds and not using them for their proper purpose could seriously damage your wealth.

And FYI that fund is not medium risk and is very high risk if held on its own.

concrete_kid

I see. So you think investing is more suitable when it is 'extra' money you can afford to lose, and not a house deposit which I'll obviously need?

So is the best thing just to put it in the highest interest savings account?

A_Flock_Of_Sheep

concrete_kid wrote: »

I see. So you think investing is more suitable when it is 'extra' money you can afford to lose, and not a house deposit which I'll obviously need?

So is the best thing just to put it in the highest interest savings account?

High interest accounts don't exist either I am afraid. Today IP high income fell by 3p. If there is a crash during your house deposit saving then you could be put back years.

concrete_kid

Thanks for the advice. Won't be doing that then...

A_Flock_Of_Sheep

Well i can only advise what I wouldn't do. At the end of the day it would be your choice and cash.

And yes investments would be for extra money on top of cash savings that you can't afford to lose but can afford to commit to the stock market for years in the hope you will achieve growth.

10,000 invested in Invesco Perpetual High income back in 1988 is now worth approximately £190,000 but that is 25 years of commitment. The length of a mortgage and in that time there were huge crashes.

grizzly1911

A_Flock_Of_Sheep wrote: »

No way. I am a risky Ewe and have been gambling with the Nikkei and FTSE and Turkish stock markets. I am also a mean Poker player. Today on the stock markets was a lesson for me.

I really strongly suggest you don't contemplate what you're thinking and delete it from your mind. IP income and high income are not to be toyed with but respected for what they are intended for. In my view gambling your house deposit on these funds and not using them for their proper purpose could seriously damage your wealth.

And FYI that fund is not medium risk and is very high risk if held on its own.

A_Flock_Of_Sheep wrote: »

High interest accounts don't exist either I am afraid. Today IP high income fell by 3p. If there is a crash during your house deposit saving then you could be put back years.

A_Flock_Of_Sheep wrote: »

Well i can only advise what I wouldn't do. At the end of the day it would be your choice and cash.

And yes investments would be for extra money on top of cash savings that you can't afford to lose but can afford to commit to the stock market for years in the hope you will achieve growth.

10,000 invested in Invesco Perpetual High income back in 1988 is now worth approximately £190,000 but that is 25 years of commitment. The length of a mortgage and in that time there were huge crashes.

:T:T:T

I'm with AFOS on this one.

Is that last point inflation adjusted?

P.S. and o4u.

MoneySaverLog

50/50 cash and investments. Cash savings for deposit, investments for long term growth that may, or may not, pay off the mortgage early

atush

concrete_kid wrote: »

Thanks for the advice. Won't be doing that then...

You are taking advice from a newbie investor who panics sometimes, like yesterday.

Are you interested in the opinions of those who have invested for longer?

I have to say, with a 7 yr horizon, I would invest at least 50% of the money you are saving towards a house. 2 reasons, the last 7 years have come with some major market trauma, yet I am up. Second, you will be investing regularly. Say the market falls next year- you will have a number of years to go and in the meantime will be buying more units for the same 2-300 than you were before.

Look up Pound Cost Averaging.

El_Selb

I'm looking to do exactly the same as Concrete Kid (£2K ish to start, £300 thereafter to build up a house ) so I read this with great interest. I'll also be a first time investor (aside from Ladbrokes, with terrible returns).

Tracker Funds seem to be a popular option on this forum for someone in our situation?