# Investing or Saving?



## Maxx? (Aug 1, 2007)

I am looking to start long term savings towards a house deposit

I currently have £1000 to start the ball rolling, but i don't know what to do with it? 

What would you recommend me to do with it to give me a nice little return back?

I am sure a lot of you have already bought a house or are saving towards it, so thought i better ask some experienced people :thumb:


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## mistryn (May 17, 2007)

i would too like to know as well


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## VixMix (May 8, 2008)

Check out www.moneysavingexpert.com/banking for expert advice.

The basic rule of thumb is use up your tax free allowance so the first place you want to be looking at is best buy tables for MINI CASH ISA. Basically you are allowed to save £3,600 (£5,100 from next year) tax free. This means that the whole of the interest rate quoted is given to you. This money is RISK FREE as it operates as a savings account.

It is up to you if you want to tie your money into the account. As it is for a house deposit I would consider a short term tie in, something in the line of 1 year. This will likely give you access to slightly better interest rates without losing too much flexibility for you to get your cash. Some of these accounts operates a penalty scheme, whereby if you do not withdraw any cash throughout the year you get a higher rate of interest. Check out the best buy tables and see what suits you :thumb:


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## Blazebro (May 18, 2007)

IMO, the last thing you should be doing is looking at investing. With investments your looking at 5yrs+.

Tuck it away into an ISA and enjoy tax free savings. Your capital would be safe and you'd get a fairly good return. Just look around and choose wisely.

If you went directly into shares, you would get a better return when you compare dividend to interest, but your capital is totally at risk. I've got about 4K in shares which earnt me about £270ish this year. Savings account on the same amount earnt me £60.00. However I can draw the money out of my savings account when I like and not have to pay anyone anything to do so.


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## -ROM- (Feb 23, 2007)

You only benefit form ISAs being tax free if the money stays in them for at least 5 years.


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## Adam D (Nov 3, 2009)

rmorgan84 said:


> You only benefit form ISAs being tax free if the money stays in them for at least 5 years.


Sorry mate, but I think that is wrong.

A mini-cash ISA will accrue interest tax-free and, depending on the type of account, you can withdraw it without losing any interest to tax.

As the others had said, don't put your hard earned into shares because you could lose a lot of it. Put it into a mini cash ISA. Interest rates aren't that good at the moment, but at least there is downside to your capital investment.


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## chris'svr6 (May 17, 2006)

Save as much as you can if the short term, expect house prices to drop by 10% after the next election, whoever's in will need to cut spending or increase taxes (probably both). If labour stays in, expect alot of covering up (the economy is nearly on it's knees, but their not going to admit that), if it's the consevatives, they will tell us, what ****e state were in!!, as they can blame the previous government!! I'm sitting on my money till then, unless someone takes a silly offer. As stated, use the ISA's first, you can get to the money straight away, will get some return, but it's tax free. How old are you??, not that it matters too much. Try and cut back on things for now, ie try cutting down on smoking, going out as much, without really affecting your lifestyle too much, you still need a life! If you can save a further £50-100 a month from this, the better, but save as much as you can.


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## hutchingsp (Apr 15, 2006)

Any debts? If so pay those off first.


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## kh904 (Dec 18, 2006)

VixMix said:


> Check out www.moneysavingexpert.com/banking for expert advice.
> 
> The basic rule of thumb is use up your tax free allowance so the first place you want to be looking at is best buy tables for MINI CASH ISA. Basically you are allowed to save £3,600 (£5,100 from next year) tax free.


Isn't the new allowance of £5,100 if your over 50 years old?

Also good advice is pay debts off first!!!


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## kh904 (Dec 18, 2006)

I'm also looking to buy my first property! 
I've looked at a few properties, but I think i'm going to hold out for a while perhaps after the next general election as someone said before.

I wouldn't believe the mainstream media when they say house prises are starting to rise again (they are trying to talk it up again)! They are still way inflated, and I believe the economy will fall again (trying to devalue the £, trying convince the public to join the Euro).

The world's banks are also reaching their limits of the fractional reserve lending (google it!), and they are being proped up by printing more money!

Sorry for going off topic, but the point i'm trying to make is save as much of a deposit as possible, don't let yourself be forced in a position where you think that you will miss out buying property, therefore putting yourself in debt you can't repay! 
Just because a bank will lend you x4/5 your salary, doesn't mean you can afford it!

To save as much as possible here's what i do:

I have 3 accounts: 

1. Current account (wages are paid into it, pay for stuff on my DEBIT card from this account) - I always keep around £1000 in here! Interest is terrible!

2. Saving account - Anything above £1000 in my current account is transferred to this savings account each month - Higher interest rate (better interest rate if you don't withdraw frequently) - Mid-term saving!

3. Cash ISA account - At the begining of each tax year (April), I transfer £3,600 from my savings account into my ISA account using the full allowance - Even higher Interest rates (I've never withdrawn any money from here yet)! Once withdrawn you can't put anymore in until the next tax year if you max out the allowance. - Long term saving

I've done myself an excel spread sheet of my monthly income and expenses for each month of the year so i can set budgets for myself (ie food, going out, holidays, clothing etc etc) - You still have enjoy yourself!

Rather than spending your money each month and saving what's left over, do it the other way around, put aside an amount each month (what ever you feel comfortable/or your target), and budget how you spend the remainder on anything you want/need.

Do you rent or still live at home? If you're still at home, that's great, it will really help save you loads for a deposit! Don't feel rushed into moving out, even though you may feel you really want your own space - think long term!

Simple things like paying you car insurance in one instead of monthly saves you around 10% - better than any bank interest!

Banks will generally require 10%, but ideally they want 20% (you get better mortgage rates), but if you can try to put down 30% or even 40% deposit!

I know that may seam impossible at first, but once you are in the mindstate of saving, it becomes very easy!

In 7 years, i've saved £60K (for my deposit), i've got a nice car, gone on 2 holidays abroad a year and manage to enjoy myself!
I know this will change once I do buy my own place, but I will be in a better position with a larger deposit!

Good luck! Patience pays!


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## Blazebro (May 18, 2007)

kh904 said:


> Isn't the new allowance of £5,100 if your over 50 years old?
> 
> Also good advice is pay debts off first!!!


Nope, it's £5100 from Oct this year for over 50's, next April for the rest of us.


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## Maxx? (Aug 1, 2007)

I am 19, and will have some Student debts following closely behind me.
I am taking a year placement in the industry in 2 years and the average wage i will be looking at is 15k for the year, but the experience is vital

Can use some of that to try and get rid of the student debts.


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