Savings

redpelly

Hi can anyone give my daughter some advice
She is 21 years old and has a really good job she currently has around £20000 savings and wants to save for a house.
where should she invest her savings and should she get a right to buy ISA
any advice would be appreciated

joolsvern

I'm no expert but my son (19) is in a simialr position (although possibly not the really good job bit). He's recently opened a Lifetime ISA with a view to buying his own home further down the line.



He saves approx £13K a year and has also opened a Moneybox cash ISA (he likes the app) so he can put regular amounts of savings into that and then another £4K into the L-ISA next tax year.



He understands that once the money is in there then it can only be used for a house or when he hits 60. As I understand it you can not use a HTB ISA for the deposit which you can with the L ISA (you might want to check that) so unless bank of mum and dad has her back thats a negative.



HTB only allows £1200 inital deposit and £200 per month after that, very limiting. Not sure if she can have both - check that out too.

1Foz

I have a different wiring to the thinking of both products. I look at the LISA as the product I will use to buy a property with cos it will provide the best opportunity for interest/growth over a medium term period - whereas the HTB is capped at 12,000. My HTB ISA, I only look at as a Cash ISA, I've got it maxed out each year but its the last thing I invest in after my regular savers with First Direct and Nationwide (paying 5% each) cos obviously it pays only 2.5%. However, that 2.5% is far higher than any Cash ISA product I could get elsewhere (barring some obscure building society up north or whatever that might be paying 0.2% more than that). Nationwide's HTB ISA is a good product especially since its classed in one wrapper, that allowed me to open its 1.4% loyalty ISA alongside it (that has pretty much POFA in it since I recently opened a Marcus account instead for spare cash).

First priority = LISA (1,000 free cash each year i you put the max in)
Second priority = Either/both of First Direct / M+S 5% regular savers (£180/yr interest)
Third priority = HTB ISA (if the LISA is kept for retirement savings then the bonus available + interest still makes it a better next option than the one below)
Fourth = drip feeding to 3% savers such as Virgin / HSBC from a 1.5% or similar easy access account (such as Marcus or Shawbrook).

At least...this is how I've been doing it. Keep in mind of course that you can only use one of the LISA / HTB products for a house purchase. And if you don't have the HTB product open yet, I think the government are closing the scheme for 'new' accounts at banks/building societies from November 30th. Can still keep investing in them though. So, would be worth opening one and sticking a few quid in there just to get the thing opened. I definitely recommend Nationwide's one, the rate has been consistent for a long time now.

EdGasketTheSecond

Find a rich husband

Alexland

joolsvern wrote: »

He saves approx £13K a year and has also opened a Moneybox cash ISA (he likes the app) so he can put regular amounts of savings into that and then another £4K into the L-ISA next tax year.

Are you sure? Moneybox offer the best rate Cash LISA but not a Cash ISA? Maybe he opened their 95 day notice savings non-ISA account?

Redpelly - the Moneybox Cash Lifetime ISA is likely to be more attractive than any HTB ISA as she can make higher contributions for a bigger 25% bonus. The main LISA limitations are the account needs to be open for 12 months before the solicitor draws the money and the property cap is £450k. Withdrawal for any other purpose before age 60 incurs a 25% penalty which works out slightly more than the bonus.

https://www.moneyboxapp.com/cash-lifetime-isa/

Alex

1Foz

Alexland lol Probably what they meant in all fairness

13k per year is bloody great though. Aside from bonuses/interest paid out, all my savings have come in the last 4 years (cos I was paying off debts from a previous relationship before that).

2016 = 6k
2017 = 7k
2018 = 8k
2019 = 9k

This got me thinking....The price of love (!). If I had a partner there's no way I'd have made these savings

Next year my target is to save £10,000. I don't disallow myself of treats and such...I mean, paradoxically, there has to be a limit to one's scrimping lifestyle Luckily I just got a pay rise worth an extra £100/month after tax otherwise I don't think I'd be able to reach that target while also trying to live some kind of (meagre) existence

joolsvern

Yes he opened a moneybox LISA and is looking at the 95 day savings, my bad

Poor_Leno

Jools, definitely go with the LISA for house purchase (you are correct that only ONE of LISA or HTB can be used). But don't discredit having the HTB ISA - you can have both open just that only one can be used for house purchase. For anyone not owning a property the best cash ISA they can hope to have (for any leftover money to invest) is a HTB ISA. So, I look at my HTB ISA as just that - a cash ISA paying basically double the interest rate of most other cash ISA's. The Nationwide one offers 2.5%. It's been at that rate for a long time now, so its a good product for that.

Regards the 95 day account on MoneyBox. Much depends on how much he is putting aside. 1.65% is very good. But consider something else. You could stick half the money in Marcus's easy access saver paying 1.45% and the other half in the top 1 yr fixed on the market (Which is 1.9%). Drip feed the money from the Marcus easy access into Virgin Money's 3% regular saver and you get the benefit of earning interest on the money in the Marcus while feeding into the virgin one and scooping interest on that aswell. The virgin product is also easy access btw - which is quite rare for a regular saver, which usually you'd lose the interest on with most other providers offering 3% or higher. So yeah I'd do that cos you'd have a chunk of money locked away in that 1.9% 1 yr fixed, while the remainder earning good interest from being in the Marcus and drip fed into virgin.

Have you considered opening a First Direct current account (and M+S) - both of these have 5% regular savers. Paying the max into those would bring in about £180 of interest.

Bravepants

EdGasketTheSecond wrote: »

Find a rich husband

Hmmmm...if I ever have a daughter one of the first bits of advice I would give her is to not be dependent on any man for ANYTHING!