An idea, your input please

mxscbi

Hello all, basically I am in the process of saving for a house, I am going to start a Help to Buy ISA and deposit the maximum each month (£200 I believe) so I get the free £3000 at the end, but I also want to save more money, I am an impulse buyer so was thinking would it be a good idea to buy a Gold Sovereign each month (£245) and keep them instead, it's much harder for me to spend that then when the cash is in my account, should I buy a normal Gold Sovereign once a month or save and buy something like a 1oz Britannia (£995 each) this might give better interest then a savings account but even if it doesn't it sounds like a better plan.

Linton

Why do you think the price of a gold sovereign wont go down? The current gold price in US$ is about 30% below the price 5 years ago.

ColdIron

Quite apart from the risk involved in your plan, why do you think you can save up to buy a coin and not save up for a deposit?

mt99

As said, the price of gold can be quite volatile and is therefore classed as a risky investment. You could make money - equally you could lose it. If you are prepared to accept the risk then yes indeed it would stop you 'impulse buying' - provided of course you don't instead just run up a big credit card bill instead!


Another option might be a fixed term account (eg 5 years) so you can't access any money saved but I don't know of any that will let you add to it monthly once you have opened it. Perhaps someone else can help.


You could also buy premium bonds on the basis that you hopefully resist the temptation to cash them in and impulse buy!

mxscbi

ColdIron wrote: »

Quite apart from the risk involved in your plan, why do you think you can save up to buy a coin and not save up for a deposit?

I don't need to save for a coin as I would buy one or two each month on pay day.

ColdIron

mxscbi wrote: »

should I buy a normal Gold Sovereign once a month or save and buy something like a 1oz Britannia (£995 each)

Sorry, just going on the information you presented

mxscbi

Linton wrote: »

Why do you think the price of a gold sovereign wont go down? The current gold price in US$ is about 30% below the price 5 years ago.

Gold price in the UK has gone up by 10.67 percent in the last 6 months and 38.36 percent in the last year, maybe it's different in America.

ColdIron

And it's gone down 37% in the last 5 years, that's the thing about gold, it goes up and down. It's a decent store of wealth but a rotten store of value
http://www.infomine.com/investment/metal-prices/gold/5-year/

Edit, I would dispute your 38% figure. An increase of $130 per troy ounce from $1,075 to $1,211 is closer to 12%
http://www.kitco.com/charts/popup/au0365nyb.html

TrustyOven

mxscbi wrote: »

Hello all, basically I am in the process of saving for a house, I am going to start a Help to Buy ISA and deposit the maximum each month (£200 I believe) so I get the free £3000 at the end, but I also want to save more money, I am an impulse buyer so was thinking would it be a good idea to buy a Gold Sovereign each month (£245) and keep them instead, it's much harder for me to spend that then when the cash is in my account, should I buy a normal Gold Sovereign once a month or save and buy something like a 1oz Britannia (£995 each) this might give better interest then a savings account but even if it doesn't it sounds like a better plan.

I think long term it's a good idea for your to mend your impulse buy / buyer consumption attitude and actually learn to save.

Good luck taking 20 - 40 gold sovereigns in a bag to your mortgage lender. Hopefully you won't get arrested under suspicion of some criminal activity. Good luck getting all your money from gold traders, hopefully the buy/sell spread isn't too big (probably will be, so you will lose lots of money).

And how quickly can you liquidate gold? Do you have to wait weeks/months to liquidate 5k+ of gold coins?
What about deposit money in your account? CHAPS payment takes maybe hours? days? May make a difference in how fast you can secure your house purchase and not get beaten to it by someone with a faster source of money.

I'm not really sure how you think it's a good idea. Doesn't seems sensible to me. Sure, if you like buying stuff and buying shiny stuff, and going "oooh shiny" and displaying it and such then sure, buy whatever suits you, but for a house deposit... it seems reckless.

One of the aspects to your plan, the bit about buying on pay day, is generally a good idea, but actually when the plan is savings - e.g. take £245 on pay day and transfer to a savings / high interest current / regular saver / pensions / investment account (I'm talking general case, not about buying house). This is called "Pay yourself first".

Alice_Holt

Really bad idea, please don't do this.
Gold prices can be very volatile.
Transactional costs are likely to be high.

Where would you keep your gold sovereigns?
This safe: https://www.safe.co.uk/products/burton-eurovault-aver-grade-0-size-7e.html
comes with insurance of up to a £6k limit on cash,

But it does cost £2k!!!

Perhaps you would prefer to keep your shiny coins under the mattress?

Eco_Miser

Save your money in Regular Saver accounts on payday. You can get up to 5% AER. Most, but not all, lock your money away for a year from the starting date. Even with the instant access ones you can only move the money to your current account, which I hope would give you time to remember you're supposed to be saving for a house.