What to do with £70,000

surfer9

You are in your early 30's, you are single, you can't afford to buy a property as you live in the South East which is ridiculously expensive. You have saved £70k. Interest rates are going to return nothing very soon.

What would you do with your savings?

Buy. However you can - just buy.
Buy to let.
Invest in stocks and shares.
Save + rent all your life, benefit with an extra £35k from the lifetime ISA.


Buying is difficult in my area. Most expensive area outside of London.

Buy to let. Is there much money in this these days. Especially for someone who only has enough money to buy to let a 1 bed flat in the South East / a 3 bed house in say Bristol or Portsmouth. Is the return going to be worthwhile?

Stocks and Shares - any good opportunities here? Any good sources for solid advice?

Renting. Are we more or less / on the verge of becoming a generation of renters (many of us in 20's/early 30's)?. Is it maybe worth just renting forever. The £70,000 is nice to fall back on, is plenty to fall back on, could even be used gradually as I get older. Though will need to think about a pension. The Lifetime ISA which comes out in April could help add £35,000 to my funds come the time I turn 50. Maybe some reasonable long term stocks/shares investments can add to that too. As well as one day inheriting at least £100,000. I don't really know what kind of money you need for retirement years on top of the State pension. So not sure that would be enough, especially as I would likely still be renting at that point and continuing to rent until I die. So will a lifetime of renting likely cause problems once retirement occurs?

Not really sure what to do with my savings going forward...

squeeks

What do you want to do?

70K is a good sum for a house deposit for most of the UK. Maybe less so for London, but it depends on what you are looking to buy.

Renting is fine, hopefully you'll know the advantages and pitfalls of renting if you have been doing it a while.

You may want to look into retirement planning as well. Plug some numbers into the pension calculators.

Pincher

I had less than £2,000 when I was 30.
Got an MSc in something useful, then a decent job.

My contemporaries got their degrees on schedule, then jumped in when property went crazy in 1988. Their ample salaries went to feed the 13% mortgage, which they could not get out of, due to the negative equity.

I paid 5%, 5.25% mortgages half the time, then 2.25% because of the credit crunch. By being ten years behind the lemmings, I had a far easier time.

Don't be silly, get a fixed rate for at least five years, and save on rent.

andrewm1981

£70k is a very decent deposit, especially when there's help to buy out there. Even ignoring that, my solution would be to buy a decent 2 bed flat in the best area you can afford near where you want to be.

Entirely hypothetically, given the limited data, say you have a salary of £30k. 5 times salary plus deposit gives you a budget of 210 after fees. This should be enough to buy a half decent, maybe ex council flat. Not your dream flat, but a start.

Buy it, rent your other room out. Assume rental income (tax free) of £500/month = £6k year. Which is a very healthy overpayment.

After 5 years you'll have paid off £60k of your mortgage roughly, and with a say 2% rise/annum in house values, banked a decent profit too. Assuming £20k gain in house price, maybe more then you're 80-100k better off than you are now. Of course if you don't like sharing then it may not be as good. But they would be paying off most of your mortgage for you!!

fireblade28

Stocks and Shares. Save until you get 350K. Put in a dividend tracker and retire living of the interest. At 7% that would give you a salary of around 25k per year to live of. Assuming you don't have children.

With children or thinking about children I buy a house.


With renting it can actually work out better in some areas. Okay you won't have assets but you have to run the numbers. House insurance, maintenance, new kitchen/bathroom. All of these are continuous additional costs to owning a house that you avoid if you rent.

kidmugsy

Buy spade. Buy gold sovereigns. Use first to hide second. Wait.

nb0825

Get yourself a flat/house before you start investing elsewhere. If you're permanently residing in the UK it never pays to always being a renter. If its too expensive to buy where you are, buy on a commuter route, just get something you can call home

dawyldthing

You can buy a house outright for that in some areas. Shop around though as it also depends where you want to live really as to what you will get for your money

surfer9

Cheers for your replies.

I really need to do some thinking. Most of you focused buying....so maybe that's the route to take.

I live in one of the most expensive areas in the UK outside of London. Costs around £200,000 for a 1 bed flat. You can get them cheaper in less desirable areas. If I'm honest - not much appeals to me. Maybe I'm too picky. Personally - I don't see how it's possible for me to ever own a 2 or more bedroom home around this area. I could maybe only just afford a £200,000 1 bed flat, or maybe a 2 bed flat if I'm lucky. How do I ever move up the ladder from there. I get that if you buy with a partner you will be able to borrow more and 'afford' a 'family' home, but once you have a kid or 2 - how the heck do you keep up with repayments if you don't have regular / decent pay rises.

Another reason why I am not keen on buying is because I like living with other people and am currently in a house-share.....so I'd like to stay put for now......

No comments on Buy To Let? Would this not be worthwhile? There are 2-3 bed houses in Portsmouth that are only around £180,000. Would chucking my savings at this + getting someone else to pay off the mortgage make sense, or are taxes / interest rates and other costs going to limit the benefits of buy to let?

xylophone

because I like living with other people and am currently in a house-share...

If you can afford to buy a two bedroom place you could "rent a room"

https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

AlanP_2

I guess you are probably talking about Oxford as I think I read "most expensive outside London title" went there.

Do you have to live where you currently live?

Could you move away a bit & commute to work?

Could you get a job somewhere else in the country?

If you've saved £70k that implies a decent salary as renting in expensive areas is expensive compared to cheaper area.

I understand that for a lot of 20-30 year old's housing appears out of reach but a lot still manage to get on that ladder.