United Kingdom: Where to save money for a property deposit
The chancellor announced an ISA in this week's budget intended for people saving to buy their first home. For every £200 put in the government will add £50 to the account so I would strongly encourage you to put the money into that as it is also tax free. "Ultimately you are as stuck as all other investors with low returns which get taxed. However there are a few possible mitigations. You can put up to 15k p.a. into a ""normal"" ISA (either cash or stocks & shares, or a combination) if your target is to generate the depost over 5 years you should maximise the amount you put in an ISA. Then when you come to buy, you cash in that part needed to top up your other savings for a deposit - i.e. keep the rest in for long term savings. The help to buy ISA might be helpful, but yes there is a limit on the purchase price which in London will restrict you. Several banks are offering good interest on limited sums in current accounts - Santander is probably the best you can get 3% (taxed) on up to 20K - this is a good ""safe"" return. Just open a 123 Account, arrange to pay out a couple of DDs and pay in £500 a month (you can take the £500 straight out again). I think Lloyds and TSB also offer similar but on much smaller ammounts. Be warned this strategy taken to the limit will involve some complexity checking your various accounts each month. After that you will end up trading better returns for greater risk by using more volatile stock market investments rather than cash deposits." "From April 2017 the plan is that there is now also going to be a ""Lifetime ISA"" (in addition to the Help to Buy ISA). Assuming those plans do not change, they government will give 25% after each year until you are 50, and the maximum you can put in per year will be £4000. Catches:  You can only take the money out for certain ""life events"", currently: Buying a house below £450000 anywhere in the country (not just London).  Passing 60 years of age. If you take it out before or for another reason, you lose the government bonus plus 5%, ie. it currently looks like you will be left with 95% of the total of the money you paid in. You cannot use the bonus payments from this one together with bonus payments from a Help to Buy ISA to buy a home. However you can transfer an existing Help to Buy ISA into this one come 2017. While you are not asking about pensions, it is worth mentioning for other readers that while 25% interest per year sounds great, if you use it for pension purposes, consider that this is after tax, so if you pay mostly 20% tax on your income the difference is not that big (and if your employer matches your contributions up to a point, then it may not be worth it). If you pay a significant amount of tax at 40% or higher, then it may not make sense for pension purposes. Tax bands and the ""rates"" on this ISA may change, of course. On the other hand, if you intend to use the money for a house/flat purchase in 2 or more years' time, then it would seem like a good option. For you specifically: This ""only"" covers £4000 per year, ie. not the full amount you talked about, but it is likely a good idea for you to spread things out anyway. That way, if one thing turns out to be not as good as other alternatives it has less impact - it is less likely that all your schemes will turn out to be bad luck. Within the M25 the £450000 limit may restrict you to a small house or flat in 5-10 years time. Again, prices may stall as they seem barely sustainable now. But it is hard to predict (measures like this may help push them upwards :) ).  On the plus side, you could then still use the money for pension although I have a hard time seeing governments not adjusting this sort of account between now and your 60th birthday. Like pension funds, there is an element of luck/gambling involved and I think a good strategy is to spread things if you can." Another option is the new 'innovative finance isa' that allow you to put a wrapper round peer to peer lending platform investments. See Zopa, although I don't think they have come out with an ISA yet.
"GTI NET is a fresh new MLM company that make the buzz. This will be for sure your best mlm company in 2017,2018 and 2019. Coming from Belgium it is little known in the United States, United Kingdom and Asia. It has a ""non saturation"" model due to the combination of a wonderful financial product and one of the best multi level marketing compensation plan. This Multi Level Marketing review will shake your conception of the MLM industry for sure, and turn your presuppositions about the MLM industry upside down! To enroll or to get more information contact me at gti.net@YourBestMLM.com http://YourBestMLM.com" "Remember that risk should correlate with returns, in an investment. This means that the more risk you take on, the more return you should be receiving, in an efficient marketplace. That's why putting your money in a savings account might earn you <1% interest right now, but putting money in the stock market averages ~7% returns over time. You should be very careful not to use the word 'interest' when you mean 'returns'. In your post, you are calling capital gains (the increase in value of owned property) 'interest'. This may be understating in your head the level of risk associated with property ownership. In the case of the bank, they are not in the business of home construction. Rather than take that risk themselves, they would rather finance many projects being done by construction companies that know the business. The bank has a high degree of certainty of getting its money back, because its mortgages are protected by the value of the property.  Part of the benefit of an efficient marketplace is that risk gets 'bought' by individuals who want it. This means that people with a low-risk tolerance (such as banks, people on fixed incomes, seniors, etc.) can avoid risk, and people with a high risk tolerance (stock investors, young people with high income, etc.) can take on that risk for higher average returns. The bank's reasoning should remind you of the risk associated with property ownership: increases in value are not a sure thing. If you do not understand the risk of your investment, you cannot be certain that you are being well compensated for that risk. Note also that most countries place regulations on their banks that limit the amount of their funds that can be placed in 'higher risk' asset classes. Typically, this something along the lines of ""If someone places a deposit with your bank, you can only invest that deposit in a low-risk debt-based asset [ie: you can take money deposited by customer A and use it to finance a mortgage for customer B]"". This is done in an attempt to prevent collapse of the financial sector, if risky investments start failing." From Wikipedia: A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring. This implies to me that these loans are only against real estate. Presumably, because it doesn't move and can't be simply taken away, as in the case where you have say, a high value diamond or painting. "Your question points out how most fractional reserve banks are only a couple of defaults away from insolvency. The problem arises because of the terms around the depositors' money.  When a customer deposits money into a bank they are loaning their money to the bank (and the bank takes ownership of the money).  Deposit and savings account are considered ""on-demand"" accounts where the customer is told they can retrieve their money at any time.  This is a strange type of loan, is it not?  No other loan works this way.  There are always terms around loans - how often the borrower will make payments, when will the borrower pay back the loan, what is the total time frame of the loan, etc..  The bank runs into problems because the time frame on the money they borrowed (i.e. deposits) does not match the time frame on the money they are lending." If you are really worried your best bet is to move all your cash from Sterling into a foreign currency that you think will be resilient should Brexit occur. I would avoid the Euro! You could look at the US Dollar perhaps, make sure you are aware of the charges for moving the money over and back again, as you will at some stage probably want to get back into Sterling once it settles down, if it does indeed fall. Based on my experience on the stock markets (I am not a currency trader) I would expect the pound to fall fairly sharply on a vote for Brexit and the Euro to do the same.  Both would probably rebound quite quickly too as even if there is a Brexit vote it doesn't mean the UK Government will honour the outcome or take the steps quickly. ** I AM NOT A FINANCIAL ADVISOR AND HAVE NO QUALIFICATIONS AS SUCH ** The location does matter in the case where you introduce currency risk; by leaving you US savings in USD, you're basically working on the assumption that the USD will not lose value against the EUR - if it does and you live in the EUR-zone, you've just misplaced some of your capital. Of course that also works the other way around if the USD appreciates against the EUR, you gained some money. if you open spreadbetting accounts and prove to the inland revenue that trading profits are not your main income, you will not be liable for any tax on your gains.  Holding a property in the uk which is point of call for any held bank accounts needs to be verifiable though.  This is only an issue if accounts are larger than £400k. seems anything smaller doesnt get the sniffer dogs attention at the IR dept. One option might be to use tax certificates to save this money. At the moment they don't pay any interest (unless you deposit more than £100,000 at once), so they aren't very attractive from that point of view. But they do give you a clean way to segregate your money and for the purposes of charging penalty interest, HMRC will treat you as having made the payment at the time you purchased the certificate, if it turns out that you should have paid the actual tax earlier than you did. Another option is a regular saver account. These typically have limits of £250 per month, so you might have to open a few given the amount you have to save. That would add up to a lot of maintenance effort, particularly as you'd have to open new accounts again each year. However, they do typically offer good interest rates compared to what's available elsewhere, and the way they operate fits well with your needs (money coming in regularly and then going out all at once).