Student needs savings/money advice.

[TheInsanity1234]

Hello all.

So I'm in quite a lucky position. Bit of a long and rambling post, but basically I'm after tips on how to put away £20k while teacher training so I can buy a house pretty much as soon as I start working as a teacher (NQT).

Now for the detail:

I've recently graduated from my BSc Physics degree, and I'm starting a teacher training course in September. This course will be about 10 months, and I'll finish sometime in mid-July, 2021

I have taken out both the tuition and maintenance loan. The maintenance loan will be a touch under £10k paid in 3 instalments in September, January, and April-ish. (I get near-maximum as parents' household income is way less than £25k)

I also found out recently (hadn't really been paying attention to the funding side of things as always planned to take loans) that I may be eligible for a £26k tax free bursary from the government for training to teach in Physics. I need confirmation from the university I'm training to teach with on whether I'll actually get it or not, but pretty much all online information I've researched say it's certain I'll get it. This will be paid in 10 instalments beginning in September, so £2,600 a month.

I want to basically make sure that by the end of month 10 of the bursary, if I do get it, I have saved up at least £20k of the bursary, which will give me a perfectly satisfactory £1,600 income monthly for 10 months.

I've worked out my monthly bills, £700 a month almost exactly, which leaves me with £900 a month for food, and general life stuff. I typically have a £100 weekly food shop (I live with my partner, so I'm feeding two mouths). So let's say £450 left over each month for debt/treats.

I also owe my family about £1,700 at the moment (just small loans of a few hundred here and there to cover bills etc at times), but unlikely to go up beyond this now. In addition to this, I have a £2k interest free overdraft which I'll be at the bottom at the beginning of September. So about £3,700 of debt I'd like to be free of by the time I've finished teacher training. The £450 a month left over will happily cover all this debt, and leave me with maybe £80 a month for small treats like a takeaway here and there.

The only thing is, I'm absolutely clueless what to do with such a large sum of money. I don't want to just leave it piling up in my main account, as it'll be so easy to just piss it away without a care in the world.

So, tips on what to do? I've got a premium bonds account with £1 in it to keep it open, I was thinking about just putting the student loan money straight into that as it came in, and putting £1k a month+extra into the premium bonds. What other things are there I could take advantage of to help boost the size of my deposit in a year?

[TheInsanity1234]

anonymous said:

[redacted]

But yeah, I definitely plan to use it as a house deposit. I want to get on the ladder as early as possible, as the sooner I can pay off a mortgage in full, the sooner I can start enjoying the nicer things in life... Like Range Rovers!

The thrust of my rambling post was more, where do I put said £20k. Are Premium bonds a good bet or should I look into ISAs? What other things could I put the money into that may increase the deposit by a couple of grand?

[Chainsaw Rebuild]

I think your training is going to be a year then you want to buy a house? A year is a rather short length time to try and grow an investment.

The problem with a stocks and shares ISA is that it might drop in value in the short term. If you were investing for 5 years that’s probably ok because it will recover from the drop. However if it dropped and hadn’t recovered within a year you can either withdraw your money and take the loss, or wait for it to recover.

Someone more knowledgable will be along soon but I would think a cash ISA is your best bet. You won’t make much but you won’t lose it either.

[anonymous-user]

In your situation, where you want some certainty for your prospective house deposit, what I would do is,

• 50% on deposit at the bank at the best interest rate you can find, and
• 50% into a mainstream global equities fund.

But if you're not comfortable with the risk of losing, say, £3k very quickly if global equities go pear shaped - just put the whole lot on deposit. Generally speaking equity funds would be considered a longer term investment (5+ years) not short term. It's all about your appetite for risk/reward.

Personally I wouldn't look at Premium Bonds unless you're already using your tax free interest allowance, which seems unlikely. U

[i4got]

£4k into a Lifetime ISA before April 6th 2021. £4k into a Lifetime ISA after April 6th 2021. Tax man will add £2k as long as it is used for a house purchase.

If you don't use it for a house purchase or for retirement you lose the taxman's contribution.

(Assuming you're under 40).

Full details...

https://www.gov.uk/lifetime-isa

[TheInsanity1234]

i4got said:

£4k into a Lifetime ISA before April 6th 2021. £4k into a Lifetime ISA after April 6th 2021. Tax man will add £2k as long as it is used for a house purchase.

If you don't use it for a house purchase or for retirement you lose the taxman's contribution.

(Assuming you're under 40).

Full details...

https://www.gov.uk/lifetime-isa

Oooh, I'd have no trouble tying up £8k in a LISA if it would guarantee me a £2k return in a year's time. I can always just set up a cash ISA for the rest, and pop some into premium bonds in the hopes of winning a cheque or two!

Bit unscrupulous, but would it be okay to also set up a LISA in my partner's name and put £8k into that (4 before April '21 and 4 after), to get a further £2k in my partner's name towards a house? We plan on buying jointly anyway.

That would make up a £24k deposit in total, which could be the difference between a meh house and a lovely house!

[TheInsanity1234]

rockin said:

In your situation, where you want some certainty for your prospective house deposit, what I would do is,

• 50% on deposit at the bank at the best interest rate you can find, and
• 50% into a mainstream global equities fund.

But if you're not comfortable with the risk of losing, say, £3k very quickly if global equities go pear shaped - just put the whole lot on deposit. Generally speaking equity funds would be considered a longer term investment (5+ years) not short term. It's all about your appetite for risk/reward.

Personally I wouldn't look at Premium Bonds unless you're already using your tax free interest allowance, which seems unlikely. U

I'd rather have 100% certainty I have a £20k deposit than gamble even a part of it for a big return, after all I'll be buying potentially in a year's time, so the interest I'd gain in any normal savings wouldn't be much at all. Hence me being curious about other types of saving methods that could get me a couple of grand but with absolute certainty that I'd still have my original £20k. Annoyingly, had I known about this bursary thing I'd have opened a Help-To-Buy ISA before the deadline, but nevermind!

I only threw premium bonds in as I've already got an account opened, and got a cheque for £25 every now and then when I had £4k in there (long since spent through studying, the loans don't leave much for food etc after bills), so figured with a hefty £20k I'd get a few more cheques! Are they not that good then?

[Benbay001]

TheInsanity1234 said:

Bit unscrupulous, but would it be okay to also set up a LISA in my partner's name and put £8k into that (4 before April '21 and 4 after), to get a further £2k in my partner's name towards a house? We plan on buying jointly anyway.

AFAIK, you would have to gift your partner the £8k and she would have to put it into her own LISA.

If anything happens between you, the money is hers.

[i4got]

TheInsanity1234 said:

Oooh, I'd have no trouble tying up £8k in a LISA if it would guarantee me a £2k return in a year's time. I can always just set up a cash ISA for the rest, and pop some into premium bonds in the hopes of winning a cheque or two!

Bit unscrupulous, but would it be okay to also set up a LISA in my partner's name and put £8k into that (4 before April '21 and 4 after), to get a further £2k in my partner's name towards a house? We plan on buying jointly anyway.

That would make up a £24k deposit in total, which could be the difference between a meh house and a lovely house!

Absolutely nothing unscrupulous about that in my view - its just sensible.

[anonymous-user]

TheInsanity1234 said:

I'd rather have 100% certainty I have a £20k deposit than gamble even a part of it for a big return, I only threw premium bonds in as I've already got an account opened, and got a cheque for £25 every now and then when I had £4k in there (long since spent through studying, the loans don't leave much for food etc after bills), so figured with a hefty £20k I'd get a few more cheques! Are they not that good then?

I think your logic is right as regards avoiding risk.

PBs will be secure but there some catches, especially when held for a short term,

• The month you have to wait before getting into the draw. It significantly reduces your average return probability.
• The typical return is much lower than the average return, because the big prizes take so much of the overall prize pot.
• The inability of most people to get any benefit from PBs "tax free" status.

Nonetheless, PBs will secure your capital and you're not going to earn much interest anywhere at 1% on deposit. On balance I'd still go for putting the whole lot on deposit for at least some guaranteed interest and perhaps buy a lottery ticket once a month in the hope of getting lucky!

[TheInsanity1234]

Benbay001 said:

AFAIK, you would have to gift your partner the £8k and she would have to put it into her own LISA.

If anything happens between you, the money is hers.

Something to bear in mind, thank you.

i4got said:

Absolutely nothing unscrupulous about that in my view - its just sensible.

Just seems a little cheeky, but then I suppose plenty of people are dodging tax bills far more than £4k per year and I'm intending to be a teacher so never will be able to dodge any tax!

[ooid]

Since you open this under finance, I have only one advice;

Stop that teacher training course immediately. Get a business or finance postgrad degree and move to finance, since you have a physics degree. Your talent and youth would be wasted in academia and it’s rotten politics. The savings here and there is nothing comparing to what you can achieve or earn in the industry.

Good luck!

[TheInsanity1234]

ooid said:

Since you open this under finance, I have only one advice;

Stop that teacher training course immediately. Get a business or finance postgrad degree and move to finance, since you have a physics degree. Your talent and youth would be wasted in academia and it’s rotten politics. The savings here and there is nothing comparing to what you can achieve or earn in the industry.

Good luck!

Eh, unfortunately I don't find business or finance particularly appealing. I enjoy teaching, and have run quite a lot of 'teaching' projects during my degree (think outreach and that sort of thing), and I'm not money motivated - I just want to have a guarantee that I will always be able to earn enough to have some form of financial security, and while teaching wages are st, they're more than enough to live on.

Furthermore, I can access all sorts of funding to do this for 'free', and then in a few years when I've got a couple of years of experience behind me I can quit and start chasing a more ambitious career with the knowledge that Physics teachers will always be in demand. If I try to be ambitious now I might well end up losing my job in 5 years and I won't have a back up career to fall back on.

I don't think the finance/business sector is doing that well in the midst of a pandemic currently, and all the teachers I know have had their full pay throughout the entire pandemic/lockdown.

[BoRED S2upid]

Chainsaw Rebuild said:

I think your training is going to be a year then you want to buy a house? A year is a rather short length time to try and grow an investment.

The problem with a stocks and shares ISA is that it might drop in value in the short term. If you were investing for 5 years that’s probably ok because it will recover from the drop. However if it dropped and hadn’t recovered within a year you can either withdraw your money and take the loss, or wait for it to recover.

Someone more knowledgable will be along soon but I would think a cash ISA is your best bet. You won’t make much but you won’t lose it either.

It might drop but just as likely make money. Take Fundsmith for example over the past 3 months of global pandemic and stock market volatility it’s managed a 9% return.

[Halitosis]

TheInsanity1234 said:

Just seems a little cheeky, but then I suppose plenty of people are dodging tax bills far more than £4k per year and I'm intending to be a teacher so never will be able to dodge any tax!

This would count as tax avoidance (perfectly legitimate and sensible) as opposed to doing something outside of the rules - which is tax evasion and naughty

[superlightr]

TheInsanity1234 said:

Eh, unfortunately I don't find business or finance particularly appealing. I enjoy teaching, and have run quite a lot of 'teaching' projects during my degree (think outreach and that sort of thing), and I'm not money motivated - I just want to have a guarantee that I will always be able to earn enough to have some form of financial security, and while teaching wages are st, they're more than enough to live on.

Furthermore, I can access all sorts of funding to do this for 'free', and then in a few years when I've got a couple of years of experience behind me I can quit and start chasing a more ambitious career with the knowledge that Physics teachers will always be in demand. If I try to be ambitious now I might well end up losing my job in 5 years and I won't have a back up career to fall back on.

I don't think the finance/business sector is doing that well in the midst of a pandemic currently, and all the teachers I know have had their full pay throughout the entire pandemic/lockdown.

why do you think the pay is not good? what pay will you get? what pension will you get? what holidays will you get? What other perks?

[TheInsanity1234]

superlightr said:

why do you think the pay is not good? what pay will you get? what pension will you get? what holidays will you get? What other perks?

It's pretty widely known that teachers are expected to work far more hours than their salary is typically worth. 25% of teachers in the UK supposedly work 60+ hours a week, and most work around 48-50 hours a week during term time.

Starting salary is just £25k per year, pre-tax and everything. With my Physics degree I supposedly could land myself a job paying in excess of £30k as a starting salary with far fewer working hours if I pick my specialisms wisely. Comparatively, teaching wages are 'crap' but as I say, £25k starting salary is far better than anything I'd hope to get working as an 'intern' in some private company hoping to get a paid position.

Plus I get £26k bursary for training to teach now, so that's my house deposit sorted out in 1 year, and I'll be a home owner before the age of 25, if all goes to plan.

Holidays for teachers are always considered to be 'excellent' because of school holidays being so long, but a lot of people don't realise just how much work happens outside of term time. Often teachers are so busy handling the actual teaching during term time that they don't have time to do the administration side of things, so that all often has to get done during the holidays, on top of all the lesson planning that they're expected to do, etc etc.

Pension will be whatever the standard teachers' pension is I assume, probably better than most workers' pensions, but there's been a lot of conflict lately between Govt and teachers on that, so... who knows!

As I said, it's not a great salary for the pressure most teachers experience on the job, but it's secure, regular, and a comfortable amount to live on, which is all I want from life at the end of the day!

[superlightr]

TheInsanity1234 said:

superlightr said:

why do you think the pay is not good? what pay will you get? what pension will you get? what holidays will you get? What other perks?

It's pretty widely known that teachers are expected to work far more hours than their salary is typically worth. 25% of teachers in the UK supposedly work 60+ hours a week, and most work around 48-50 hours a week during term time.

Starting salary is just £25k per year, pre-tax and everything. With my Physics degree I supposedly could land myself a job paying in excess of £30k as a starting salary with far fewer working hours if I pick my specialisms wisely. Comparatively, teaching wages are 'crap' but as I say, £25k starting salary is far better than anything I'd hope to get working as an 'intern' in some private company hoping to get a paid position.

Plus I get £26k bursary for training to teach now, so that's my house deposit sorted out in 1 year, and I'll be a home owner before the age of 25, if all goes to plan.

Holidays for teachers are always considered to be 'excellent' because of school holidays being so long, but a lot of people don't realise just how much work happens outside of term time. Often teachers are so busy handling the actual teaching during term time that they don't have time to do the administration side of things, so that all often has to get done during the holidays, on top of all the lesson planning that they're expected to do, etc etc.

Pension will be whatever the standard teachers' pension is I assume, probably better than most workers' pensions, but there's been a lot of conflict lately between Govt and teachers on that, so... who knows!

As I said, it's not a great salary for the pressure most teachers experience on the job, but it's secure, regular, and a comfortable amount to live on, which is all I want from life at the end of the day!

Thank you. was curious. I had an excellent physics teacher at school and see him from time to time now- he has long since retired but i make the point of saying hello to him when I do and have thank him for being such a decent, patient and good teacher who has stuck in my memory - a role model and decent man. Im sure you will equally give great memories to future students as the passion for teaching is a common denominator.

[TheInsanity1234]

superlightr said:

Thank you. was curious. I had an excellent physics teacher at school and see him from time to time now- he has long since retired but i make the point of saying hello to him when I do and have thank him for being such a decent, patient and good teacher who has stuck in my memory - a role model and decent man. Im sure you will equally give great memories to future students as the passion for teaching is a common denominator.

No problem!

Of course, we've all had those teachers we hated, and I had a pretty rough time in education, but by and large I remember the wonderful ones who tried their best to give me the best chance I could have at a good start in life, and I dare say that hard work has paid off!

[Chainsaw Rebuild]

TheInsanity1234 said:

superlightr said:

Thank you. was curious. I had an excellent physics teacher at school and see him from time to time now- he has long since retired but i make the point of saying hello to him when I do and have thank him for being such a decent, patient and good teacher who has stuck in my memory - a role model and decent man. Im sure you will equally give great memories to future students as the passion for teaching is a common denominator.

No problem!

Of course, we've all had those teachers we hated, and I had a pretty rough time in education, but by and large I remember the wonderful ones who tried their best to give me the best chance I could have at a good start in life, and I dare say that hard work has paid off!

I had a brilliant science teacher when I was at school, he's seriously outstanding. I failed his A level partly because I was always working at the local theatre in light/sound, which is what I do professionally now. I recently went back to help my mate, who works at the school, with a project and bumped into this teacher.

It made me think about how I should have passed that A level really and what a good teacher he was (he helped me get double A at GSCE science too). So emailed him and thanked him for his teaching and apologised for the A level, we corresponded back and forth and I got him complimentary tickets for him and his wife to see The Royal Philharmonic play where I work.

The whole thing made me feel satisfied that I had righted a "wrong" and that this chap got to go and see a good show.