How do I get the most out of the money I've saved?

Nullmoon

Hi everyone!
Before I get to the question, I think a bit of background information might be helpful.

I am 27 and currently have a salary of £22k, which is due to rise to £24k this week. I'm still living at home but I'm looking to move out and rent for a while for personal reasons. As I don't want to house share, I will end up spending around 1k a month after all outgoings, essential payments, spending money etc. Due to this, I'm set to be saving around £300 a month (roughly 20% of my monthly pay).

Up to this point I've simply moved my spare money from my current account into a cash ISA and letting it build up (currently I have £27k saved up). Obviously this is not maximising the potential of my savings. After doing some research, I've considered the following action plan for my money this year-


-Max out a LISA to help save for a deposit on a house further down the line (£4k)

-Put £10000 into my pension fund.

-Keep the remaining money in a cash ISA as an emergency fund and for future plans like a wedding etc. I can also put some of it towards next year's LISA.

-Switch to First Direct for the joining bonus and...

-...open up a regular saver with them for the 5% and deposit my predicted monthly savings into this. I can then put this towards either next year's LISA or my pension.



This is my prospective plan. To be honest I have no idea what is best to save for or how I'm doing so far savings-wise. I know it's stupid to compare as there will always be people who have amassed a lot of money, those who have little savings due to their mortgage, getting married, having kids etc, those who are in debt, and so on. I think it's just reassuring to have some kind of benchmark to work with. Fortunately, the only debt I have is my student loan (which I've read is pointless to pay off unless I'm on a much higher salary).

My questions/concerns for you lovely people are-


-Does my plan seem sensible enough? Do you think it covers all potential facets?

-Is there any kind of benchmark for someone of my age? This is vague as some people are really on the ball regarding mortgages, pensions etc from an early age. Admittedly I've only just started looking into all of this.

-Going forward is it more beneficial for me to save up for a huge deposit on a house (taking advantages of the benefits of a LISA yearly for however long it takes to move in with my partner), focusing more on my pension (which I have only recently started), or splitting the money between the two?

-Is a LISA the best way to go for saving a deposit? I understand only Skipton are offering this?

-Is it worth looking into an additional pension fund? I'm currently enrolled in NEST with my employer.


The short version - As I'm nearing the end of my 20s, I think it's time to get my finances in order and start the whole process of being a proper adult! Any help would be much appreciated.

Thank you all in advance!

Zorillo

Where do you live? Depending on the property market I'd be buying a flat rather than renting with that sort of deposit.

Nullmoon

Thanks for your reply. I'd be looking to move into Birmingham/Sutton Coldfield to be closer to work. Rent is around £550-£700 for the kind of places I'm after. I think the issue with me buying is that a) I'd be doing it on my own and b) I'll probably end up moving out in a few years once I settle down with my partner anyway.

Zorillo

You'd gain equity rather than pay rent if you bought. You could then sell up or rent out the flat when you move on to a house.

I 100% regret the money we wasted on rent in our 20s.

TheShape

Pay enough into your pension to gain the maximum matched contribution from your employer. Other than that concentrate on saving for a property through a LISA, high interest current accounts and regular savers.

I don't think I'd lock away £10k in pension savings when I want to purchase a property in the near future.

ValiantSon

Don't bother with the cash ISA as the interest paid will be rubbish. Put the money into a mixture of interest paying current accounts to get the best return.

inflationbuster

Nullmoon wrote: »

I'm still living at home but I'm looking to move out and rent for a while for personal reasons.

Don't do it swallow any pride. Stay home and save, why throw your money down the pan renting?

Nullmoon

Thanks for your suggestions!

-I'll definitely look into seeing if my manager will increase the pension payments along with me.
-Yeah, the cash ISA is definitely a dud. I'll look into multiple regular savers to get more return.
-It's not merely a question of pride, hence 'personal reasons'

fiisch

Just my two penneth but....

Another vote here for buying a flat. If you meet someone down the line and they too own a flat, when you both come to sell and buy a place together you'll end up with far more money to throw at the new place.

I'd be loathed to pay rent with that amount sat in the bank, and a back of the fag packet calculation would suggest that you should be able to get a mortgage of £90k (£20k / year * 4.5 = £90k mortgage).

Therefore, allowing for costs, £110k place on your own, or with help to buy you could be looking as much as £135k. I've rounded down your income to £20k in case of any regular outgoings car payments etc....

The problem is your timescale is fairly short, so investment in S&S ISA etc. is likely unwise. You could cycle the money through high interest regular savers, and put the balance in a decent easy access, but I think if personal reasons are prompting you to move out, really really look at the buying angle.

£24k / year may seem a lot when living at home, but when you're paying rent and other living costs, you will find it hard to save at current rate. At least if you're on the property ladder you'll benefit from house price rises and have the money in bricks and mortar, which is a reasonably safe place to be!

thenewcomer

hey i only started working at 27 yo! (i know so pampared by parents lol- not)

anyways, i recommend at this market to rent rather than buy. i know i am contradicting with the other forumers. if you are good with investment, you can earn much more than locking your money in a property.

Nullmoon

fiisch wrote: »

Just my two penneth but....

Another vote here for buying a flat. If you meet someone down the line and they too own a flat, when you both come to sell and buy a place together you'll end up with far more money to throw at the new place.

I'd be loathed to pay rent with that amount sat in the bank, and a back of the fag packet calculation would suggest that you should be able to get a mortgage of £90k (£20k / year * 4.5 = £90k mortgage).

Therefore, allowing for costs, £110k place on your own, or with help to buy you could be looking as much as £135k. I've rounded down your income to £20k in case of any regular outgoings car payments etc....

The problem is your timescale is fairly short, so investment in S&S ISA etc. is likely unwise. You could cycle the money through high interest regular savers, and put the balance in a decent easy access, but I think if personal reasons are prompting you to move out, really really look at the buying angle.

£24k / year may seem a lot when living at home, but when you're paying rent and other living costs, you will find it hard to save at current rate. At least if you're on the property ladder you'll benefit from house price rises and have the money in bricks and mortar, which is a reasonably safe place to be!

Thanks for going into so much detail, I'll bear this in mind!

thenewcomer wrote: »

hey i only started working at 27 yo! (i know so pampared by parents lol- not)

anyways, i recommend at this market to rent rather than buy. i know i am contradicting with the other forumers. if you are good with investment, you can earn much more than locking your money in a property.

Haha someone HAS to be different Thanks for your input!