22 year old with savings needs advice

saxophonephil

So i'm 22 and here is my profile:

Salary - £21,000 per annum
1 year fixed bond savings account - £34,000 at 1.96%
Current Account - £3,700
No car, minimal rent at home, save £700 - £1,000 a month.

Would appreciate advice on what best to do with my savings from working. Seen many posts online with conflicting advice on where to invest and what to and what not to do. Just seems as if leaving it in a savings account could be a waste of growth potential for that amount?

Also I live in the south-east and with my salary buying a property isn't an option, although maybe buying a small property elsewhere to rent out could be an option?

Looking forward to your thoughts on how to play my cards right at this stage and what to do with my savings

Zero_Sum

Is buying a property completely out of the question or what if...

... You move up the career ladder
... Buy with a partner
... Move away from SE

If so Lisa could still be decent option. Personally I wouldn't be going buying cheap houses in area your not familiar with. The BTL game isn't as good as it used to be, plus it's quite risky if you get a dodgy tenent.

Do you have a pension? If not, that should be a priority.

benbay001

What are you saving for?
Buying a property absolutely is an option. I bought a flat in the south east a year and a half ago whilst earning only £1k more than you yet with £20k less deposit.

fiisch

Buying a property now is not an option, but your salary will likely increase overtime... At your age, I would be loathed to invest/tie in much money until you're on the property ladder, as inevitably you'll want access to this money for a deposit (not sure whereabouts in the Southeast you are, but our first flat in West Sussex was circa £200k, which we bought with a 5% deposit on a new buy scheme, which you'd do standing on your head...).

In terms of longer term saving, pension provision is number 1. How much do you contribute currently to your workplace pension scheme? Are you taking full advantage of employer matching? Little increases now will pay big dividends for retirement...

You could dabble in a S&S ISA - Vanguard Lifestrategy funds are a popular choice but others exist - for longer-term savings which are still accessible. For any money allocated to this, you're looking at a minimum 5 but more realistically 10 year outcome.

Everyone will have a slightly different perspective, but for me:
1. House deposit (accessible, easy access saver);
2. Pension provision (minimum taking full advantage of employer matching);
3. Dabble in S&S, but I wouldn't make this my priority.

Buy To Let is not the cash cow it once was, and you'll need a 25% deposit for a BTL mortgage, so even in a cheaper area options will be limited. You've also got the tax/admin/management issues to contend with...

cloud_dog

If some of the available money is going to be targeted towards a property (at some point) then it would be remiss of the OP not to use a LISA (whether a deposit or S&S is up to the OP) and to benefit from the Governments 25% uplift. There aren't many places/times you can get free money especially out of a Government.

eskbanker

cloud_dog wrote: »

If some of the available money is going to be targeted towards a property (at some point) then it would be remiss of the OP not to use a LISA (whether a deposit or S&S is up to the OP) and to benefit from the Governments 25% uplift. There aren't many places/times you can get free money especially out of a Government.

Seconded - funding a cash LISA, plus money already saved and projected, would in all likelihood raise a pot of about £60K within a couple of years, which must surely be enough for a deposit to get onto at least the bottom rungs of the housing ladder?

saxophonephil

Currently living in Reading, pension scheme I contribute 5% and employer contributes 3% (about £1,500 in the pension pot so far) and in regards to career progression i'm looking and jobs that would fund ACA or CIMA accounting qualifications - in the future I could hope to earn more but for now this is it.

In regards to renting a property I agree it's not a cashcow any longer. But potentially (assuming i'm still single by then) move elsewhere to a place where a 2 bedroom house is affordable and take in a lodger into the second room to help pay off most of the mortgage. Is that still a profitable move in this day and age? As you're not leaving the whole house with the tennants.

saxophonephil

A house would be great for the future when I get my long-term career plan sorted. Right now just wondering how best to maximize my savings.

xylophone

If you will want to buy a property at some stage then consider a LISA.

https://www.moneysavingexpert.com/savings/lifetime-isas/

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

Savings rates above.

Consider monthly contributions to a stocks and shares ISA. Example

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0001&gclid=EAIaIQobChMInbeJtOye5wIVjLTtCh1aIQEwEAAYASAAEgK34fD_BwE&gclsrc=aw.ds

https://monevator.com/using-vanguard-lifestrategy-funds-life/