What to do with my money for next 3yrs - £65k + 1k/mth
Discussion
Buy a BTL, rent it out and overpay the mortgage with the excess rent; I bought my first at 22 and second at 25, both were making a profit after tax just on the rent.
Capital growth was 20% (over 7.5 years) and 25% over 4 years, sold them both for a nice profit this year to fund my own ‘long term’ home, didn’t like either house but knew the area and the good rental return a, the above percentage doesn’t include the profit from the rent, post tax.
All in all, there is no chance I could have made anywhere near that much in ISA or S+S with the same, limited, risk level, plus it allowed me to waste my cash on holidays, cars and booze whilst knowing I had a sensible safety net, plus held some company shares which have quadrupled; I have been a little lucky.
30 this year though so want to relax a little and enjoy a nice home for myself.
Is what your making even covering inflation?
Look in your area, what have house prices done in the last 3 years, halve it and see if that is more or less than what your cash is currently earning you.
I also was maxing my pension contributions, as per the scheme rules, but as my employer puts in 20% I don’t need to add too much.
Also, don’t forget to enjoy your life, I see my friends now (25-35) tied down with mortgages, rent, kids, whatever and they have never lived, just saved.
All the best whatever you decide.
Capital growth was 20% (over 7.5 years) and 25% over 4 years, sold them both for a nice profit this year to fund my own ‘long term’ home, didn’t like either house but knew the area and the good rental return a, the above percentage doesn’t include the profit from the rent, post tax.
All in all, there is no chance I could have made anywhere near that much in ISA or S+S with the same, limited, risk level, plus it allowed me to waste my cash on holidays, cars and booze whilst knowing I had a sensible safety net, plus held some company shares which have quadrupled; I have been a little lucky.
30 this year though so want to relax a little and enjoy a nice home for myself.
Is what your making even covering inflation?
Look in your area, what have house prices done in the last 3 years, halve it and see if that is more or less than what your cash is currently earning you.
I also was maxing my pension contributions, as per the scheme rules, but as my employer puts in 20% I don’t need to add too much.
Also, don’t forget to enjoy your life, I see my friends now (25-35) tied down with mortgages, rent, kids, whatever and they have never lived, just saved.
All the best whatever you decide.
You need to get yourself a plan. Owning a property doesn't have to tie you down, although I do understand your thought process.
You could do what I've done. Buy a house (not a flat) so that you don't have a forever monthly cost. Don't spend too much. Pay a lot of it off, which with your amount would be easy, then rent it out if/when you do want to up sticks.
As others have said, you're clearly financially capable, but not being sensible.
Don't get me wrong, having a mortgage/house is a pain for leaving it all behind - something I am considering now. But in the time I have debated with myself, my house has gone up in value c.£30k, and it's more than half paid off.
You could do what I've done. Buy a house (not a flat) so that you don't have a forever monthly cost. Don't spend too much. Pay a lot of it off, which with your amount would be easy, then rent it out if/when you do want to up sticks.
As others have said, you're clearly financially capable, but not being sensible.
Don't get me wrong, having a mortgage/house is a pain for leaving it all behind - something I am considering now. But in the time I have debated with myself, my house has gone up in value c.£30k, and it's more than half paid off.
Condi said:
Ffs go and enjoy your youth....
Each to their own, but Im not a dis-similar age, bought a house 4 years ago and its increased in value by £130k or so. Granted I spent 40k improving the place, but my housemates essentially paid for that. I dont save, other than maxing out the company pension, and basically spend what I want, on what I want, and save anything left over.
What fun, or use, is money in the bank? It only every has 1 use, and that is to be spent eventually. You can save for a rainy day, but having had 2 or 3 friends/acquaintances pass away over the last year, each at a much too young age, your rainy day might never come. Dont turn into scrooge waiting for tomorrow, one day tomorrow wont come and the last thing you will care about will be money in the bank, but what might bring you a smile is the good times you had and the places you went.
Blimey, you sound incredibly like me. Bought my current place 2.5 years ago, it's increased modestly (£30k-ish), and instead of improving it (it doesn't really need it), I've paid off the mortgage / funded fun stuff with my lodger's money. I max out my pension too (only as my company puts in 16%, and I'm a 40% tax payer), and spend what I want, but save what's left over (there's always some left over, unless it's been a heavy month).Each to their own, but Im not a dis-similar age, bought a house 4 years ago and its increased in value by £130k or so. Granted I spent 40k improving the place, but my housemates essentially paid for that. I dont save, other than maxing out the company pension, and basically spend what I want, on what I want, and save anything left over.
What fun, or use, is money in the bank? It only every has 1 use, and that is to be spent eventually. You can save for a rainy day, but having had 2 or 3 friends/acquaintances pass away over the last year, each at a much too young age, your rainy day might never come. Dont turn into scrooge waiting for tomorrow, one day tomorrow wont come and the last thing you will care about will be money in the bank, but what might bring you a smile is the good times you had and the places you went.
Buying a house doesn't have to mean you can't have fun in your youth - it can enhance that ability. Particularly as right now, you're spending more on rent than you would on a mortgage.
I’m also 30, bought a house at 21, lived very well for the past 9yrs and saved very little - yet ultimately my net worth is considerably higher simply down to buying right and appreciation.
Whilst buying a house isn’t always the right answer - You cannot argue that sticking all that money into a 1.5% account is particularly clever! Factor in inflation and are your savings actually growing?
If your long term goal is to own property then I don’t see what you are waiting for! Money is cheap and even a modest increase in property value will smash anything the bank is giving you...
Whilst buying a house isn’t always the right answer - You cannot argue that sticking all that money into a 1.5% account is particularly clever! Factor in inflation and are your savings actually growing?
If your long term goal is to own property then I don’t see what you are waiting for! Money is cheap and even a modest increase in property value will smash anything the bank is giving you...
Been doing some thinking and numbers.
Inflation after all returns cost me around 1300 last year, or 110/mth. Could change with inflation, interest rates, and market returns of course. Alone, it isn't going to make me do anything drastic.
Renting cost me 6k last year (500/mth), for a place worth 90k. After 1.5k of service fees, the landlord's left with 4.5k - a 5% return on his money. Doing a like for like comparison, in reality I wouldn't buy a flat with such fees. If I put 60k down on a mortgage, keeping 20k as an emergency fund, the mortgage interest (only) would be 35/mth or 420/yr, and I'd miss 750/yr of savings interest and 1k/yr of L-ISA bonus. Total cost 3.7k a year, or 305/mth. That'd be 2.3k a year (190/mth) less than renting, before buying and eventual selling costs. Renting costs a 60% premium.
Those two make my total "waste" 3.6k a year (300/mth), 17% of the new money I save, or 4 weeks' worth of working. That's a lot, it'd go a long way towards a nice car, but doesn't change my life.
Buying to live would eliminate the rent waste, with a huge margin to allow for rate rises, not taking into account moving and maintenance costs. Inflation exposure would be swapped for house price exposure, so no guarantees there in real terms. Overall would be still expect to be significantly up over long enough a term. But I wouldn't buy a flat, so would need to compare with a house even though not like for like. Buying to let comes with additional hassle and also political risk. I don't know where I'd buy anyway, my only ties are to an economically depressed area, and I'd almost certainly need to leave my current area for a similar job should I lose my current one.
That leaves me to counter the waste some other way, or if that's too risky, to accept it. I need to consider setting aside funds for emergency and house deposit, and put at least some of the rest and new money into trackers within my S&S ISA. Rebalancing my savings split from 94-6 cash-S&S. As The T Boy said, this would allow me to wait for the market to recover should I want to sell to pay down the mortgage in case rates rise.
My high rate of saving is down to deliberately avoiding lifestyle inflation as my income has grown, something I decided to do over 5 years ago. I have a standing order to save the difference between my net pay and what it used to be back then. So I budget on my old salary, including some savings and pension out of it as I used to. This gives me peace of mind that I'm not getting used to good times that may not last, as I highly doubt I could land a similarly-paying job should I lose my current one - I was lucky to join the right company at a low level at a good time. I'm expecting to fall back to earning 25-30k someday. I'm not saving for anything in particular, apart from a buffer in the face of uncertainty, but I know I'll need it all eventually (and much more) for a paid-off house and retirement.
Quite a few people asked if I'm enjoying my life, dedicated to saving, or waiting for tomorrow that never comes etc. Well tbh, it's alright but not great. I do track where my money goes and forecast with a few spreadsheets, and am keen on getting good value. I don't think spending more would improve it though. My time off work is already full with things I need/want to do. I'm sure I'd love a new-ish hot car until the novelty wore off and I became used to it, but I'd only get a chance to drive it on weekends. That said, I'd have no will left to live if I lost this money, had it taken away from me, or otherwise become unable to spend it.
Thanks folks.
Inflation after all returns cost me around 1300 last year, or 110/mth. Could change with inflation, interest rates, and market returns of course. Alone, it isn't going to make me do anything drastic.
Renting cost me 6k last year (500/mth), for a place worth 90k. After 1.5k of service fees, the landlord's left with 4.5k - a 5% return on his money. Doing a like for like comparison, in reality I wouldn't buy a flat with such fees. If I put 60k down on a mortgage, keeping 20k as an emergency fund, the mortgage interest (only) would be 35/mth or 420/yr, and I'd miss 750/yr of savings interest and 1k/yr of L-ISA bonus. Total cost 3.7k a year, or 305/mth. That'd be 2.3k a year (190/mth) less than renting, before buying and eventual selling costs. Renting costs a 60% premium.
Those two make my total "waste" 3.6k a year (300/mth), 17% of the new money I save, or 4 weeks' worth of working. That's a lot, it'd go a long way towards a nice car, but doesn't change my life.
Buying to live would eliminate the rent waste, with a huge margin to allow for rate rises, not taking into account moving and maintenance costs. Inflation exposure would be swapped for house price exposure, so no guarantees there in real terms. Overall would be still expect to be significantly up over long enough a term. But I wouldn't buy a flat, so would need to compare with a house even though not like for like. Buying to let comes with additional hassle and also political risk. I don't know where I'd buy anyway, my only ties are to an economically depressed area, and I'd almost certainly need to leave my current area for a similar job should I lose my current one.
That leaves me to counter the waste some other way, or if that's too risky, to accept it. I need to consider setting aside funds for emergency and house deposit, and put at least some of the rest and new money into trackers within my S&S ISA. Rebalancing my savings split from 94-6 cash-S&S. As The T Boy said, this would allow me to wait for the market to recover should I want to sell to pay down the mortgage in case rates rise.
My high rate of saving is down to deliberately avoiding lifestyle inflation as my income has grown, something I decided to do over 5 years ago. I have a standing order to save the difference between my net pay and what it used to be back then. So I budget on my old salary, including some savings and pension out of it as I used to. This gives me peace of mind that I'm not getting used to good times that may not last, as I highly doubt I could land a similarly-paying job should I lose my current one - I was lucky to join the right company at a low level at a good time. I'm expecting to fall back to earning 25-30k someday. I'm not saving for anything in particular, apart from a buffer in the face of uncertainty, but I know I'll need it all eventually (and much more) for a paid-off house and retirement.
Quite a few people asked if I'm enjoying my life, dedicated to saving, or waiting for tomorrow that never comes etc. Well tbh, it's alright but not great. I do track where my money goes and forecast with a few spreadsheets, and am keen on getting good value. I don't think spending more would improve it though. My time off work is already full with things I need/want to do. I'm sure I'd love a new-ish hot car until the novelty wore off and I became used to it, but I'd only get a chance to drive it on weekends. That said, I'd have no will left to live if I lost this money, had it taken away from me, or otherwise become unable to spend it.
Thanks folks.
It doesn’t sound like you’ve come to a conclusion.
All I can say is, while I’ve never taken it to the extremes you have (I’ve never run a spreadsheet, just lived a sensible life in my 20s), I regret a lot of it.
Now I’m sitting (reasonably) pretty; because I was sensible in my 20s, and this means I have a house which is mostly paid off, and large enough to rent a room (or two) to cover the bills.
I lost a lot of my 20s, and I’m not losing my 30s. Hopefully you’ll ‘see the light’ at some point. You’ve already alluded to it in your post.
All I can say is, while I’ve never taken it to the extremes you have (I’ve never run a spreadsheet, just lived a sensible life in my 20s), I regret a lot of it.
Now I’m sitting (reasonably) pretty; because I was sensible in my 20s, and this means I have a house which is mostly paid off, and large enough to rent a room (or two) to cover the bills.
I lost a lot of my 20s, and I’m not losing my 30s. Hopefully you’ll ‘see the light’ at some point. You’ve already alluded to it in your post.
Pulse said:
It doesn’t sound like you’ve come to a conclusion.
All I can say is, while I’ve never taken it to the extremes you have (I’ve never run a spreadsheet, just lived a sensible life in my 20s), I regret a lot of it.
Now I’m sitting (reasonably) pretty; because I was sensible in my 20s, and this means I have a house which is mostly paid off, and large enough to rent a room (or two) to cover the bills.
I lost a lot of my 20s, and I’m not losing my 30s. Hopefully you’ll ‘see the light’ at some point. You’ve already alluded to it in your post.
But having a "sensible" 20s has paid dividends now surely as you are in a very enviable position? Don't underestimate the advantage of not having to stress about money/bills.All I can say is, while I’ve never taken it to the extremes you have (I’ve never run a spreadsheet, just lived a sensible life in my 20s), I regret a lot of it.
Now I’m sitting (reasonably) pretty; because I was sensible in my 20s, and this means I have a house which is mostly paid off, and large enough to rent a room (or two) to cover the bills.
I lost a lot of my 20s, and I’m not losing my 30s. Hopefully you’ll ‘see the light’ at some point. You’ve already alluded to it in your post.
I think everyone can look back on their younger years and - with the advantages of age and experience - think of things they would do differently.
I wasn't especially sensible in my 20s - I didn't go mad, I just behaved like a normal bloke in his 20s in the 1990s - going out on the lash, gigs, clubs, holidays to Ibiza. Yes I enjoyed it, but I look back and in particular regret not devoting a bit of thought to pensions. But that ship has sailed...
Having in the past few years quit drinking and taken up scuba diving I do wish I'd done both these things years sooner. I wouldn't then have wasted quite so many weekends nursing a hangover...
But like I said, I think we could all look at ourselves in our 20s and wish we could give that person a bit of a shake!
UnwiseOwl said:
(Snip)
Quite a few people asked if I'm enjoying my life, dedicated to saving, or waiting for tomorrow that never comes etc. Well tbh, it's alright but not great. I do track where my money goes and forecast with a few spreadsheets, and am keen on getting good value. I don't think spending more would improve it though. My time off work is already full with things I need/want to do. I'm sure I'd love a new-ish hot car until the novelty wore off and I became used to it, but I'd only get a chance to drive it on weekends. That said, I'd have no will left to live if I lost this money, had it taken away from me, or otherwise become unable to spend it.
Thanks folks.
Yep that's the "hedonic treadmill" and economic concept of diminishing marginal utility (going from a £5 to a £10 bottle of wine is a big difference; a £40 to £45 bottle - not so much). Basically you can't find happiness through spending money...Quite a few people asked if I'm enjoying my life, dedicated to saving, or waiting for tomorrow that never comes etc. Well tbh, it's alright but not great. I do track where my money goes and forecast with a few spreadsheets, and am keen on getting good value. I don't think spending more would improve it though. My time off work is already full with things I need/want to do. I'm sure I'd love a new-ish hot car until the novelty wore off and I became used to it, but I'd only get a chance to drive it on weekends. That said, I'd have no will left to live if I lost this money, had it taken away from me, or otherwise become unable to spend it.
Thanks folks.
I bought an Elise rather than a house in my 20's - I try not to think about how much this has cost me.
Op, my only recommendation would be to make a plan. Keeping cash long-term will cost you, much like my Elise, but will be no fun.
Official inflation figures are made up and real inflation runs much higher.
Op, my only recommendation would be to make a plan. Keeping cash long-term will cost you, much like my Elise, but will be no fun.
Official inflation figures are made up and real inflation runs much higher.
UnwiseOwl said:
Been doing some thinking and numbers.
Inflation after all returns cost me around 1300 last year, or 110/mth. Could change with inflation, interest rates, and market returns of course. Alone, it isn't going to make me do anything drastic.
Renting cost me 6k last year (500/mth), for a place worth 90k. After 1.5k of service fees, the landlord's left with 4.5k - a 5% return on his money. Doing a like for like comparison, in reality I wouldn't buy a flat with such fees. If I put 60k down on a mortgage, keeping 20k as an emergency fund, the mortgage interest (only) would be 35/mth or 420/yr, and I'd miss 750/yr of savings interest and 1k/yr of L-ISA bonus. Total cost 3.7k a year, or 305/mth. That'd be 2.3k a year (190/mth) less than renting, before buying and eventual selling costs. Renting costs a 60% premium.
Those two make my total "waste" 3.6k a year (300/mth), 17% of the new money I save, or 4 weeks' worth of working. That's a lot, it'd go a long way towards a nice car, but doesn't change my life.
Buying to live would eliminate the rent waste, with a huge margin to allow for rate rises, not taking into account moving and maintenance costs. Inflation exposure would be swapped for house price exposure, so no guarantees there in real terms. Overall would be still expect to be significantly up over long enough a term. But I wouldn't buy a flat, so would need to compare with a house even though not like for like. Buying to let comes with additional hassle and also political risk. I don't know where I'd buy anyway, my only ties are to an economically depressed area, and I'd almost certainly need to leave my current area for a similar job should I lose my current one.
That leaves me to counter the waste some other way, or if that's too risky, to accept it. I need to consider setting aside funds for emergency and house deposit, and put at least some of the rest and new money into trackers within my S&S ISA. Rebalancing my savings split from 94-6 cash-S&S. As The T Boy said, this would allow me to wait for the market to recover should I want to sell to pay down the mortgage in case rates rise.
My high rate of saving is down to deliberately avoiding lifestyle inflation as my income has grown, something I decided to do over 5 years ago. I have a standing order to save the difference between my net pay and what it used to be back then. So I budget on my old salary, including some savings and pension out of it as I used to. This gives me peace of mind that I'm not getting used to good times that may not last, as I highly doubt I could land a similarly-paying job should I lose my current one - I was lucky to join the right company at a low level at a good time. I'm expecting to fall back to earning 25-30k someday. I'm not saving for anything in particular, apart from a buffer in the face of uncertainty, but I know I'll need it all eventually (and much more) for a paid-off house and retirement.
Quite a few people asked if I'm enjoying my life, dedicated to saving, or waiting for tomorrow that never comes etc. Well tbh, it's alright but not great. I do track where my money goes and forecast with a few spreadsheets, and am keen on getting good value. I don't think spending more would improve it though. My time off work is already full with things I need/want to do. I'm sure I'd love a new-ish hot car until the novelty wore off and I became used to it, but I'd only get a chance to drive it on weekends. That said, I'd have no will left to live if I lost this money, had it taken away from me, or otherwise become unable to spend it.
Thanks folks.
But if you bought a house you would be in nicer accomodation than you are now.Inflation after all returns cost me around 1300 last year, or 110/mth. Could change with inflation, interest rates, and market returns of course. Alone, it isn't going to make me do anything drastic.
Renting cost me 6k last year (500/mth), for a place worth 90k. After 1.5k of service fees, the landlord's left with 4.5k - a 5% return on his money. Doing a like for like comparison, in reality I wouldn't buy a flat with such fees. If I put 60k down on a mortgage, keeping 20k as an emergency fund, the mortgage interest (only) would be 35/mth or 420/yr, and I'd miss 750/yr of savings interest and 1k/yr of L-ISA bonus. Total cost 3.7k a year, or 305/mth. That'd be 2.3k a year (190/mth) less than renting, before buying and eventual selling costs. Renting costs a 60% premium.
Those two make my total "waste" 3.6k a year (300/mth), 17% of the new money I save, or 4 weeks' worth of working. That's a lot, it'd go a long way towards a nice car, but doesn't change my life.
Buying to live would eliminate the rent waste, with a huge margin to allow for rate rises, not taking into account moving and maintenance costs. Inflation exposure would be swapped for house price exposure, so no guarantees there in real terms. Overall would be still expect to be significantly up over long enough a term. But I wouldn't buy a flat, so would need to compare with a house even though not like for like. Buying to let comes with additional hassle and also political risk. I don't know where I'd buy anyway, my only ties are to an economically depressed area, and I'd almost certainly need to leave my current area for a similar job should I lose my current one.
That leaves me to counter the waste some other way, or if that's too risky, to accept it. I need to consider setting aside funds for emergency and house deposit, and put at least some of the rest and new money into trackers within my S&S ISA. Rebalancing my savings split from 94-6 cash-S&S. As The T Boy said, this would allow me to wait for the market to recover should I want to sell to pay down the mortgage in case rates rise.
My high rate of saving is down to deliberately avoiding lifestyle inflation as my income has grown, something I decided to do over 5 years ago. I have a standing order to save the difference between my net pay and what it used to be back then. So I budget on my old salary, including some savings and pension out of it as I used to. This gives me peace of mind that I'm not getting used to good times that may not last, as I highly doubt I could land a similarly-paying job should I lose my current one - I was lucky to join the right company at a low level at a good time. I'm expecting to fall back to earning 25-30k someday. I'm not saving for anything in particular, apart from a buffer in the face of uncertainty, but I know I'll need it all eventually (and much more) for a paid-off house and retirement.
Quite a few people asked if I'm enjoying my life, dedicated to saving, or waiting for tomorrow that never comes etc. Well tbh, it's alright but not great. I do track where my money goes and forecast with a few spreadsheets, and am keen on getting good value. I don't think spending more would improve it though. My time off work is already full with things I need/want to do. I'm sure I'd love a new-ish hot car until the novelty wore off and I became used to it, but I'd only get a chance to drive it on weekends. That said, I'd have no will left to live if I lost this money, had it taken away from me, or otherwise become unable to spend it.
Thanks folks.
You may get some capital appreciation on the total amount even 3% a year on £150k is £4.5k.
Also if you had spare rooms they could be rented out to someone is assume for an amount close to what your paying in rent. For numbers sake say £400 p/m or £4.8k per year.
Plus your £3.6k “waste” you noted and it all adds up.
If you bought a house that needed renovation work the capital growth may be even more.
As your renting you could have bought a more expensive house and rented it out....
As an example a few years back you could have bought a house for £200/£250k, £50/75k deposit, £500/600 p/m mortgage. It would have been rented out for circa £1000/1200 a month paying the mortgage, fees and most and most of your own rent whilst seeing capital growth of 30-40% on the total amount circa £60-£100k.
Edited by Froomee on Monday 7th May 21:38
CX53 said:
To the guys with spreadsheets, did you make these yourselves on excel or is there a pre made one somewhere I could download? I’m rubbish on excel but would like to keep a better track of my finances.
DIY, but you don't need anything clever. If you can add up, divide/multiply by 12, reference another cell and calculate percentages that'll do you nicely to start with.What you want them to show is often also pretty personal - months to no mortgage, projected years to FI, current net worth, everybody seems to want to have a different final output
I've helped someone with an online one and trying to change it to meet their requirements broke so much of the "pretty" presentation it was more trouble than it was worth.
Interesting take here on the buy versus rent decision, albeit US market focused
https://affordanything.com/is-renting-better-than-...
of course for many, buying an illiquid asset like a house to live in and building up equity in it, is a good way of saving compared with alternatives, and you do need somewhere to live.....
https://affordanything.com/is-renting-better-than-...
of course for many, buying an illiquid asset like a house to live in and building up equity in it, is a good way of saving compared with alternatives, and you do need somewhere to live.....
Gassing Station | Finance | Top of Page | What's New | My Stuff