Hope you’re all good and not going crazy during this lockdown!
I’ve been looking at my finances and I’m kind of stuck on what to do. I’m thinking about opening an investment ISA but not sure if it’s a good idea in the current climate?
I currently have:
A LISA with Moneybox - sitting at £5000. I opened it last year and maxed it out.
I also have £2300 emergency fund (I live at home and my bills are pretty cheap) in my Santander Graduate account which just dropped its interest rate from 3% to 1%.
Once I max out my LISA, I can save a lot more but I’m just not sure where to put that money.
I know ideally an S&S ISA will need 5-10 year maturity so not sure it’s the best for me considering I want to get a house deposit within the next 2 years or so. But I’m happy with a bit of risk & just want something that will grow my money overtime.
I’ve looked into the Open Money Investment ISA as per Money Saving Expert’s advice (they do it all for you and fees are cheap). But is it right for me?
The only thing I can really advise is to move your emergency fund elsewhere. You can get better than 1%. If you still want to be able to get the money right away, a Marcus instant-access Online Savings Account will give you 1.20%. Better rates may be available elsewhere if you’re happy locking the money away to some degree or other.
Everything else, I’m not sure there’s a single right answer, because of the world situation at the moment. It’s difficult to predict what will perform best.
ETA: I looked up OpenMoney. I personally don’t see the benefit in it, or any ISA with platform fees, fund manager costs, and transfer charges when you could open an account with Freetrade and just buy Vanguard ETFs.
Yes, I think you should open a Stocks and Share ISA. There are plenty of options that would suit your risk and time scale preferences. I have an ISA open with Vanguard, and most of my savings are put in a S&P 500 ETF. You obviously need to do a little bit of research before committing to put down money into any investment.
I use Freetrade but dont yet have an ISA. It is cheaper for me to have my S&S ISA with Vanguard at the moment. At some point my Vanguard fees will exceed £3 a month and then I will switch everything over to Freetrade.
I’ve had ISAs for years but have never been attracted by investment types. It doesn’t sit well with me that I could lose on the deal - so cash ISAs it is. I see what I get.
What are your goals?
You want to get a house deposit in the next couple of years. How much of a deposit do you need? if this takes up the majority of your savings for the next year or so then you don’t have any money left for investments and that answers your question.
I highly suggest you do not put your house deposit in a S&S ISA, do not make your LISA a S&S LISA.
The house deposit is my main goal. I want to get it as quick as I can. I mean, it really depends on where I decide to live. I’m currently in London and I’m tied into my job for 2 years (at the very very least). I’ve looked at moving up north i.e. Manchester/Leeds etc. Really any biggish city where I can get a job and cheaper housing. At my current salary, I could only really borrow around 120,000… a 20% deposit is what I’m aiming for. Ideally I do want to focus on the deposit to save so maybe now isn’t a good time to dabble in investing?
Keep in mind this change doesn’t really matter for your emergency fund. Its purpose isnt to make money.
I know but it’s just there for emergencies, so while it’s sitting there I’d rather it made something, than nothing.
Don’t put your short term house deposit (two years is short term in investing world) into stocks and shares. You want to be looking at 10, 20 years for investing.
Stick it in the highest saving account you can find and add to it when you can.
I’d have one, particularly now. Cash interest rates appear to be dropping rapidly --mine has dropped from 1.2% to 0.55% this month. If I was saving for a house I’d put 80-90% of my monthly savings in cash and 10-20% in investments for much further down the line. The best time to start is now.
I too have a LISA (2500). I also hold a General Investment Account (800) and a fixed rate savings account at 1.65% with three months notice. (300) - all with Moneybox.
I’ve then got 3,500 in a pot with Monzo at 1.15 % and a post office savings bond of £650. When I opened the savings bond it was at 5%, no idea what it’s at now but I’m certain it’s not great.
In terms of my savings goals, I’m looking to get to approximately 6 months salary all of which will be in an easy access account. For now that will be Monzo with the pot I opened in summer, as I think Marcus have reduced their rates? My ISAs are intended for long term saving (10-15 years), though aside from the LISA further investing is likely to sit on the back burner until I’ve got my emergency fund set up.
Not sure how I’ve ended up with so many different savings products - I even have (a little) cash under the bed
Wanted to add: I suspect Moneybox is a great introduction to saving and particularly stocks and shares ISAs, but it looks like it gets very expensive as the amount you hold with them increases. At the moment the majority of my investments are with Vanguard; I do wonder if there are more cost effective options out there…
