Saving for a deposit on a house is no mean feat. With many mortgages currently only lending with 15% deposits or more, this can be a huge sum. For a massive goal like this, investing might seem like an ideal way to grow more money, and quickly. But how do you go about it, and what’s the best route to take?
The Problem with Investing
Investing your deposit savings in stocks is not always the right move, particularly if you’re planning to buy your property within the next few years. For longer term goals and pension savings, investing is always a recommended route. However, for shorter term goals such as house purchases, often your deposit savings won’t have time to recover from short-term market losses in the time you want to fulfil your goal of buying. So, how can you get around this?
Managing the risk of your investment is key to minimising the risks you could be exposing yourself to in terms of short-term market losses.
By this, we mean that when you discuss investing with a financial adviser, they will bring up the topic of risk. ‘Risk’ refers to the degree of uncertainty or potential financial loss each investment decision you make has. Some people, when investing, choose to have a high degree of risk in their investments, as this can sometimes lead to much higher rewards later on. However, if you’re investing to top up your deposit-savings and will need the returns much sooner, it is possible to manage your investment risk levels so that you are more likely to gain money within your goal timeframe.
And it’s not just the underlying investment that needs to be carefully thought about. The ‘product wrappers’ that you use to save can have a big impact on how much you save. There are various options for obtaining government money to increase your deposit. Successive UK governments have tried to help with the sky-rocketing costs of getting onto the property ladder through various schemes for aiding savers, including Help to Buy ISAs and Lifetime ISAs, to name two. This could be the difference in affording your dream home or living with family for another year.
If you’re currently saving for a mortgage and are interested in investing, or getting advice on how best to save, talk to one of our experts today…
Over the phone: 01258 857101
Through email: ian@greenfields.biz
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