£20000 to invest

Athelcat

Hello all, 

First time poster and completely new to investing. We are a couple with around £110000 saved which we want to put towards a house deposit in about 5 years time (we will be in our mid 40s then). We are thinking of investing some of the money in a stocks and shares ISA (10000 in a higher risk account which we would not use for the house but rather a rainy day fund, so could leave long term) and 10000 in a lower risk account which we may use for the house if we need to. The rest into a savings account with the best rate we can find. I would be interested in the opinions of more experienced investors as to whether this seems like a reasonable plan. 

dunstonh

We are thinking of investing some of the money in a stocks and shares ISA (10000 in a higher risk account which we would not use for the house but rather a rainy day fund, so could leave long term)

That is a sensible idea as time dilutes the risk.

 and 10000 in a lower risk account which we may use for the house if we need to.

That may not be as good an idea.    5 years is till very short for investing at this particular point in time.   The low risk assets used to reduce the risk of equities in a portfolio are all in a "least worst" scenario at the moment and expected to continue poorly for some years.  

Albermarle

Would this potential house purchase be a 'first time buy ' for one or both of you?
If so and you are under 40 , you could consider opening and funding LISA's.

What is your pension situation , as topping those up could also maybe something to consider.

eskbanker

Athelcat said:

We are a couple with around £110000 saved which we want to put towards a house deposit in about 5 years time

I imagine there will be some logic at play here but why wait so long before buying?  Wherever you're buying, £110K should be a more than decent deposit, and buying your own property can often be a sound investment, even though it's not usually the primary rationale....

Athelcat

Not a first time buy for either of us I'm afraid so we couldn't take advantage of that. I admit I am a bit naive when it comes to pensions but I work for the NHS and am contributing to that (although currently on a career break hence the wait to look for a house) and my partner is in the armed forces so has a pension there but will need to contribute to a private one at some point when he leaves. Unfortunately he is now over 40 so he couldn't open a LISA. I'm not sure if it would be worth me opening one and contributing to that. Something else to consider?... 

Albermarle

Regarding pensions , you both have public sector Defined Benefit/Final salary pensions , which is a good position to be in .

You can contribute also to a separate Defined Contribution/Personal Pension . It would be a way of contributing extra towards your retirement and it has some tax benefits compared to normal savings/investments . You could also use a LISA instead . Can be better especially for contributions below £4kpa.
Probably a good idea to do a bit of reading at some point.
Pensions and retirement | Help with pensions and retirement | MoneyHelper
Pensions: Everything you need to know for retirement - MSE (moneysavingexpert.com)
Lifetime ISA (LISA): how they work & best buys - Money Saving Expert

Regarding your original question , the general idea looks OK ( save most and invest a smaller part ) but I would agree with dunstonh , you would be better going for  more growth orientated investments if you are going to invest at all .