Looking to get my savings in line in my 20s

K.dagger

Hi there guys,

I have been looking around this site and there are some great topics and advice so I thought that I would take the plunge and discuss what my plans are over the next few years and if you have any ideas for me to utilise my savings so I'm 22 and I have saved now with assets around 12k. I am currently debt free and life in my partners family home. I have a good job and try to save as much as possible a month between 1-2k we are now planning to buy a house but because of being close to London the house prices are £££. At the moment my money is in a normal savings account we plan to buy house in about 6-8 months time. I just wanted to know what people have done to make there money work harder and got the most out of there savings?

eskbanker

Are you both using Help To Buy ISAs or Lifetime ISAs? These offer a 25% government bonus towards first-time property purchases, but do have price caps of £450K (HTB is £250K outside London) and LISAs need to be open for a year before penalty-free use, so may not fit, but worth checking if you haven't already....

Presumably the vast majority of your savings will be absorbed by buying and furnishing (etc) your first home, so you may not need to think longer term just yet?!

Amoux

K.dagger wrote: »

Hi there guys,

I have been looking around this site and there are some great topics and advice so I thought that I would take the plunge and discuss what my plans are over the next few years and if you have any ideas for me to utilise my savings so I'm 22 and I have saved now with assets around 12k. I am currently debt free and life in my partners family home. I have a good job and try to save as much as possible a month between 1-2k we are now planning to buy a house but because of being close to London the house prices are £££. At the moment my money is in a normal savings account we plan to buy house in about 6-8 months time. I just wanted to know what people have done to make there money work harder and got the most out of there savings?

Well done, it sounds like you are already doing really well, but I have a few things to suggest.

1) If you are planning to buy a house near London, do you think you realistically have the funds to get the necessary deposit in 6-8 months time? Buying a house is really expensive. Not just the deposit, but all the fees, and possible stamp duty (for a first time buyer buying a property over £300K ) as well as buying all furniture and things you need to live. Personally 12K sounds like just a drop in the ocean unless whoever you are buying with is offering a sizeable contribution.

The reason why I also ask is that you may wish to look into opening a LISA. It's a very good savings vehicle if you are looking to buy your first home. It does however require you to have the account open for 12 months before you can use the funds to purchase a house and secondly it limits your house purchase up to £450,000. Still, I suggest to look into it as it could be suitable for you and the 25% bonus the government gives is generous.

2) I know that a house might be on the top end of your list of priorities, but really you should think about other long term investment and more specifically a SIPP or Stocks and Shares ISA to invest for the long term. It's never too early to think about your pension. You will thank yourself by starting now. I would be doing this regardless of whether I'm saving for a house (others may think differently).

3) If you have lots of money just sitting in cash, make sure that the money is working as hard as possible by putting them in the highest interest rate accounts as possible. Granted, Interest rates are not particularly great at the moment, but the top easy access savings account offers 1.5% and current account can offer 3-5% on limited amounts. Regular savings accounts offer up to 5%, but it usually requires locking your money for 12 months to get the full amount of interest.

K.dagger

Thanks for the reply guys I have looked into the help to buy scheme and even though it is interesting having to pay back 20% of the property value rather than the cost of the original propert is daunting as in my eyes. A little more info my partner has a lot more than me saved up over 60k and her money is in a isa I was thinking about it but I'm just concerned of any risk to my money if the economy goes down again obviously with the uncertainty of Brexit I really would like to see what happens after the dust settles and in terms of area was looking at either upminster or hornchurch way

badger09

K.dagger wrote: »

Thanks for the reply guys I have looked into the help to buy scheme and even though it is interesting having to pay back 20% of the property value rather than the cost of the original propert is daunting as in my eyes. A little more info my partner has a lot more than me saved up over 60k and her money is in a isa I was thinking about it but I'm just concerned of any risk to my money if the economy goes down again obviously with the uncertainty of Brexit I really would like to see what happens after the dust settles and in terms of area was looking at either upminster or hornchurch way

You're confusing the Help to Buy scheme with a Help to Buy ISA.

Take a look at the links in post 2

grumiofoundation

As above the lifetime ISA is a very good way to get extra money towards your deposit (although has to be open for >12 months) if both you and your partner open one you can get an extra £4000 in total towards your deposit if you buy in over a years time.
You can open today with £1 each, you have until April next year to pay in this years £4000 and if you end up buying a house earlier so are unable to use the LISA you have only spent £1.
You can open a lifetime ISA as a cash ISA - Skipton, Nottingham and Newcastle building societies all offer these - in these cases your money has FSCS protection.

eskbanker

K.dagger wrote: »

her money is in a isa I was thinking about it but I'm just concerned of any risk to my money if the economy goes down again obviously with the uncertainty of Brexit I really would like to see what happens after the dust settles

Sounds like you may be confused about what ISAs actually entail?

There are very different risks and rewards associated with saving (in capital-protected deposit accounts) versus investing (in funds, shares, etc), and nobody is going to advise keeping your money in anything other than the former if you'll be needing access to it over the next few years.

HTB ISAs are only available in cash form, and if you go down the LISA route then stick to the cash variant there too, so there's no reason to defer decisions about saving until after Brexit....