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Ok, so it's virtually impossible at the moment, but ways to mitigate it? I should start paying more attention to my finances; I generally leave cash just here and there and don't invest it. Recently, I've started paying into a LISA, and have opened a stocks and shares ISA. I've got a bit in premium bonds. The cash desposit I was able to save over the pandemic is now not enough so it's a decent chunk of change but no longer suffice for its intended purpose given the insanity of the housing market. At the moment it's just losing 10% per year, and I was tempted to just buy a bitcoin with it, but not sure - any other (safer) options?
Cheers,
FM
At the moment it’s just losing 10% per year, and I was tempted to just buy a bitcoin with it,
At the moment, bitcoin is losing an awful lot more than 10% a year!
You would risk your hard earned deposit for a house on bitcoin? Sounds like madness to me but it's a gamble that could pay off. Yes there are far safer options. But you already know that.
Have you maxed out a help to buy isa? Or is that the same as a Lisa?
At the moment, bitcoin is losing an awful lot more than 10% a year
But then you have ignored to the run up to 68,000.
Only invest what you can afford to lose with BTC. But it being low is not really a big deal long term. And its volatility is what makes you money.
People who purchased at around $3000 during march 2020 are probably still not complaining.
Don't see any reason bitcoin can't form part of a larger portfolio if you understand the risks.
Bitcoin could still fall more of course.
For everyone else there's the chase account at 1.5% which offers a few other benefits.
There's lots of good advice on martin Lewis's mse site.
If you are looking at short term then stocks might not be the best option. I haven't checked recently but there was a period during COVID when they dropped massively. Big problem if you needed the money at that point. They did eventually recover. There could be an advantage in investing in foreign market. No crystal ball but the government uncertainty and lack of economic ability will likely see the pound drop. Investing in a more stable currency will see you money stay more constant.
Bitcoin is a gamble. Not one I know any normal financial advisors are recommending.
Lisa seems like a good idea. In terms of cash savings, Zopa is one of the better interest rates I'm aware of.
Premium bonds may pay out but there's a critical amount you need before the odds are favourable. Something like 16k? Again MSE covers this.
Trickle it into the stock market. If you have a pension scheme then additional payments may possibly work, especially if your employer will match. But other than that, trickling it into the stock market is always the right answer.
It depends on what timeframe you want to save over, your understanding of different financial offerings, and you attitude to risk - if you don't know much then using something like Money Saving Expert will give you really safe options, which for most people that can't afford to lose much, is the best approach.
You could make money on foreign exchange or crypto, but unless you really know what you're doing, you may as well use your money to bet on your favourite sport.
As thecaptain says, trickle into the stock market is usually a safe option, but here's what my very basic index fund looks like over different time periods so YMMV
Any company backed AVC option or share save scheme?
There is no correct answer in the current market
Is the cash for a house deposit, retirement or a fun fund?
how old are you and what is your risk acceptance?
You might be best off with Vanguard or Hargreaves landsdown investment vehicle.
LS 80 maybe. Pension mtg used to be a thing where you went interest only and usef the 25% tax free lump sum to pay off the capital at the end of term.
You will need alot of pension though.
But you need an ifa really, not some random Internet advice. Ted down the pub could also advise you. But hes a roofer.
Listen to the the Meaningful Money podcast. It’s probably best to start with the millennial season which is a good general intro in to understanding personal finance, definitely not just for millennials.
Assuming this is a deposit for your first house wouldn't it make sense to compromise on either size, quality, location and get yourself onto the property ladder somehow ASAP. That way if the housing market continues to go nuts then you are hedged against it - ie the flat, or house you bought will be going up in value at a similar rate to the house you want to get to.
Then also, any mortgage payments you are making will be chipping away the debt and building equity vs paying rent.
I would/ am:
Buying Bitcoin weekly no matter what price it is at and holding it in your own wallet.
Buying US Stocks Apple/ Tesla/ Amazon/ Google for long term hold. All have had a good kicking recently.
....bear in mind things are likely to get worse before they get better, but who knows what the future holds.