At a crossroads with my investments and savings

H

heisenberg

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I have been steadily building my savings over the past number of years with the ultimate goal of purchasing my first house as a long term investment. However, given the state of the housing market at the moment, it seems unlikely that I will find a half decent property within my budget as a single person.

I have approximately €30000 in savings/investments in a number of places. The majority is in a regular savings account with a high rate of 3.0% (before DIRT), then some in another savings account with a rate of 2% and then a small amount in savings certificates which are just about to come to maturity.

I also have a portion of money in a managed investment fund which unfortunately has dropped in value by 10% since my initial investment.

I am somewhat all over the place with my money and would like to achieve the highest returns possible (obviously!). What are the best options for me, considering that a house purchase is the ultimate goal, but not at current prices?

I am considering maintaining my regular saver given that the yield is relatively high compared with what is available at the moment. However, I may also try to max out my monthly contributions for a period so that I can transfer some of my other savings which have matured or are at a lower rate in order to get the 3%.

Is this the best option given my main goal of investing in a property?
 
Leave the money in the managed investment fund as any increase up to the price you paid for it is free of tax.

After that, remain flexible. Don't tie up your money anywhere in case you need it a hurry.

The rates of interest are so small, that they don't affect the decision.

The difference between 3% and 1% after tax is about 1% or €300 a year on €30k. Certainly avail of it, but don't tie up your money or enter into any commitment for that level of return.

It's very difficult for a single person to buy a house on their own. But you should consider finding another single person in a similar position and buy a house together. It's not ideal, but it's a good way to get on the housing ladder.

Brendan
 
Agree with Brendan bar the comment on house.

You haven't given any information to allow a meaningful response re house. What stage are you at in life, age, where work, perm or temporary, fixed location, etc.

Ordinarily I would advise strongly against buying a house with another single unconnected person. I have seen these end badly, grand when everything is going fine, but when people couple up, have different objectives, have someone staying over frequently (they can as its their house too), these all cause big problems. Never mind the financial side. Not saying never but need to see full situation. I don't buy this line that is used that buying with another single person is a way of getting on the property ladder in most situations. It may be in a limited number.

Also why have you an objective of investing in property? You say as a long term investment. Do you plan to live in or rent. If live in I understand the reason.
 
Don't do anything. If you invest your deposit money and the market falls, it may set you back years in your goal to buy somewhere. The returns you may make over the short term from an investment are not worth the level of risk you are exposed to in the short term.

I don't agree with Brendan on buying a house with a friend. You will be entering into a 25-30 year deal with someone. What when one of you wants to move in a partner or sell up? How are you going to handle that, especially if you are happy where you are? Or what if they lose their job and can't pay? You are liable to their debt too. More hassle than it's worth.


Steven
www.bluewaterfp.ie
 
I have no intentions of buying a house with another party. It would be a lot more hassle that it is worth, just to get on the property ladder.

I had the idea of purchasing a house in my mind for a long time. Ultimately it is a long term investment where I would live in it, and possible rent out a room. I have done all the research in terms of initial costs and long term monthly costs. It makes financial sense to buy a property to live in, even if only for 5 years. Ideally I would live in it for longer, but who knows what the future will hold.

The main problem is that I do not see myself being able to purchase a home for a number of years given the current mortgage restrictions and lack of availability of properties on the market. Have I missed the boat?
 
You haven't missed the boat. You just have to wait before you get it. There's no quick fix to your situation. You'll just have to be patient. As opposed to dabbling in higher risk investments you'd be better off saving more or else working to increase your earnings.
 
heisenberg said:
Have I missed the boat?
Click to expand...

During the 2000's, all everyone did was talk about property and how you had to buy or else you'd miss the boat. Now, there's thousands of people who own small apartments, heavily in negative equity that are being rented out because they are not suitable to raise a family in. Or the other people who bought homes at vastly inflated prices who have massive mortgages that they struggle to pay ever month. Those are people who would have loved to have missed the boat.

Don't panic, there is plenty of time to buy your own home. No need to rush into something that you may regret for decades.

Steven
www.bluewaterfp.ie
 
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