This week, we brought in our trusted financial advisor, Victoria Nabarro, to answer your questions about all things money. It's a particularly stressful time at the moment, and the lack of clarity doesn't help. By the end of this article, you will have a much better idea of what money moves you should be making to protect yourself as much as possible, in the current climate.
Property:
Is it a good time to buy a house, or should I wait?
I think this is a question on a lot of people’s minds at the moment and sadly, there is no way to know whether it will be better or worse to buy a house in 6 months, 12 months, or some other point in the future. If this is something you really want to do now (or in the near future) the best we can do is look at the situation today and what we can achieve in these circumstances. I would really recommend speaking to a mortgage adviser (they usually offer free initial consultations) to see what’s affordable for you and go from there. What I would say is that with property, as with any investment, TIME IN the market is better than TIMING the market, so buying something that you are going to keep long enough to see it grow is more important than trying to time things right – which is almost impossible and most often comes down to luck!
Any idea how long this period of uncertainty will last? My mortgage to renew in 12 months and I’m very concerned.
Totally understand your concern and a lot of people are in the same boat at the moment! Sadly, we have no idea how long this is going to last or whether it could even get worse before it gets better. What I would say is that it is likely that your mortgage payments will be increasing, so anything you can do to prepare in the meantime (e.g. revise your budget, consider whether you might be eligible for a pay rise) would be really helpful!
If I plan on buying a house in mid-2023, is it best to keep my deposit in my current savings account?
How exciting for you and yes that’s definitely the safest option! Keeping money in cash is never ideal when inflation is eroding its value, but what cash gives us is certainty and when you need to access it so soon, you can’t afford to put it at risk by investing, and potentially finding that your savings have gone down by the time you need them for that all-important deposit.
My mortgage needs to be renewed soon, how do I get the most affordable deal?
I would definitely speak to a mortgage adviser ASAP! They are on the front lines when it comes to getting the best mortgage deals and don’t usually charge for an initial consultation, to establish what deals you’re likely to get! I would speak to more than one broker to see if any can beat other rates that have been quoted. I would also call your current lender, and see what they can offer you.
I want to apply for a mortgage now. What’s a good strategy?
That really depends on what your objectives are, what you can afford and how much risk you want to take. Generally speaking repayment mortgages with longer fixed terms provide the most certainty, whilst interest-only mortgages, and variable rates come with a lot more risk and may lead to a better or worse outcome – which sadly we just can’t know as it depends on future mortgage rates, house prices, personal circumstances, etc. Some people will take out both an interest-only and a repayment mortgage. I would speak to a mortgage broker as they are on the front lines when it comes to getting the best mortgage deals and don’t usually charge for an initial consultation.
My Mortgage rate runs out next month. I secured a 5-year rate with Santander but still in progress. Can they rescind their offer?
It totally depends on your agreement with them and their Ts&Cs so the best thing to do is to call them directly. But if you signed a contract and there’s no clause that says they can change or revoke their offer, I would think you are safe!
I’m in my 30s starting from 0: what are the essential steps to buying a house and figuring out pensions?
You’re absolutely in the right place for starting out and I can assure you that people start a LOT later than you! I would say my top 5 tips, keeping in mind your goals to buy a house and have a pension, are
Make sure that your income is greater than your expenditure
Pay off any high-interest debt as a priority (I’m talking credit cards, personal loans NOT mortgages and student loans)
Speak to a mortgage adviser to see what is affordable for you, and what you would need to achieve in terms of an income and a deposit for the type of house you’d like to buy if you’re not there yet – that should give you a solid goal to work towards (and mortgage advisers don’t normally charge for an initial consultation that should provide this information!)4. Spend time in places like Juno learning the ropes – don’t expect yourself to be an expert right away – as with anything, when you’re learning about finances for the first time it can be daunting, but once you get used to it you’ll soon get your confidence!5. Set yourself a regular ‘money date’ – and if you can do this with a partner or a friend even better for that all important accountability! Either way, see this as a non-negotiable, self-care task, and block it out of your diary on a monthly basis. Just an hour to sit and look at your financial position today, what your goals are, and what you need to do to meet them, is one of the best things you can do!
Investing:
Is it still a good idea to invest or should I focus on boosting my emergency fund more?
I think that’s a really good question in the current climate, and whilst some people will have an emergency fund that covers 1 month’s expenditure, others will have 6 months worth of expenses saved as a buffer. I think the current situation has really highlighted that jobs are insecure and costs could rise unexpectedly so I think it really highlights the need to have a substantial emergency fund sat there. However, if your emergency fund is at a level you’re happy with, I don’t think the current climate should change your investing goals.
What's the best way to save/invest £50 per month (for long term locked away)?
It totally depends on your objectives and what your savings are intended for e.g. is this to provide a long-term emergency fund, is this for some planned spending goal in the future, or do you want to grow your savings over the long run? If this is to be kept in cash, then depending on when you need access to it, a fixed-rate savings account may give you a better interest rate. If this is money you wish to grow long-term and don’t need any access to under any circumstances then investing might be a good option. There is tons of amazing content on Juno about how to get started with investing which will tell you specifically about the types of investments out there, and the different accounts – but ISA accounts are the most common starting point in the UK as they are tax free!
What should I do with my spare income? I have a healthy-ish emergency fund and I already have stocks and shares ISA and LISA
I think the current situation has really highlighted the need for emergency funds, so first and foremost I would focus on getting that HEALTHY (rather than healthyish). Beyond that the LISA has a maximum annual contribution of £4,000 p.a. and you can then contribute a further £16,000 p.a. to your Stocks and Shares ISA. Once you have maxed those out, there are a number of options – I’d say the most common are General Investment Accounts and physical property investments.
Should I continue to invest in my stocks and shares ISA? Already lost a month’s worth of investment.
It’s so common for people to panic when they see their investments start to fall – but it’s absolutely part of the process and to be expected when you’re investing for the long term. If you took the time to figure out a good strategy that you’re happy with at the outset, I would say that the current climate shouldn’t cause you to change that. However, if the recent situation has made you question whether your emergency fund is large enough, or you’re taking the right amount of risk with your ISA investments, then I would definitely look at your strategy and tweak it if you think it makes sense.
How do I invest my money in a recession?
Whilst recession is a worrying time, it shouldn’t lead you to invest any differently than under normal circumstances if you’re investing for the long run. All the same principles apply – make sure you have an emergency fund in place first, diversify across different asset classes, and take a level of risk that is in line with your risk appetite and your specific objectives. If you’re trying to time the market and essentially leverage the recession to make more money, that is a different story and not something I can advise on here, but I would add a word of caution on this, that even the professionals get it wrong attempting this a lot of the time – and if this is something you’re thinking about I would make sure that you really study and understand the strategy you’re going to take (and ensure that you can afford to take on any risk that comes along with it!) If you google ‘how to invest in a recession you’ll find loads of youtube videos and articles that cover some of the most common approaches.
Would you put all savings into one investment platform or diversify?
There really is no right or wrong here, it really is a matter of personal preference. Some people like to have all of their investments ‘under one roof’ with one platform, whilst others like to keep things separate or want to hedge their bets in case one provider fails. Think of it like having a broadband contract with EE and a mobile contract with O2 vs having both your broadband and mobile contracts with the same provider. All the platforms are doing is providing the account. The important thing is to pick platforms that are financially stable. You can still diversify your investments if their all held under one platform and many people do this
What if in 15 to 20 years I need the money I invested but the market is in a recession?
If the last few years has shown us anything it is that the future it’s that we never know what might happen next, but to give you some context the longest recession in UK history lasted 18 months. Money is always at risk when we invest, but as long as the stock market has existed the markets have always recovered eventually, but I think your question is very valid, and highlights the importance of diversification more broadly, not just within our investment portfolios. So it’s important to have other assets to rely on e.g. a physical property, a business, a stable income etc.
Saving:
Will the pound and its value go back to a rather normal level at a certain point? If I have part of my savings in pounds, what would be the best long-term strategy to protect my savings from the GBP fall.
I totally understand and you can absolutely keep savings both in GBP and in EUR to ensure that you’re not at the mercy of the exchange rate when the time comes! I would think about your timescales, so if for example you think in 20 years you are likely to be in the EU then one idea might be to keep any savings that are intended for 20 years + in euros, and shorter term savings that you’re planning to use in the UK are kept in sterling. Another thing you might want to look into is ‘currency hedging’ which you can find tons about with a quick Google. It’s a way to protect your savings against changing exchange rates!
When do you think it’s going to get better?
Honestly, I wish I knew! What I would say is that the current situation just really highlights the need for us all to ‘stay in our own lanes’ and stay focused on looking after ourselves and what is important to us as best as we can – we’re in it together!
For more information about property, investing, and saving in the current climate head to the Juno app and check out the new modules! Stay tuned for the next Ask Me Anything in our Slack and Instagram communities. We will continue to bring in experts you can speak to about any money thoughts on your mind.
Financial disclaimer:
Juno is an education-only platform. If you are unclear about anything concerning our services please do not hesitate to contact us at margot@herjuno.com. Please note that we do not provide any financial planning, accounting, investment advisory or tax advisory or planning advice. If you need financial advice please contact an independent financial advisor. Juno’s content has been prepared exclusively for the informational and educational purposes of our users. Nothing on the Juno platform constitutes an offer to buy or sell or an inducement to buy or sell any security, product, service or investment. The content available on Juno does not constitute investment advice nor does Juno provide any warranty or guarantee as to the accuracy, completeness or suitability of the information provided for any particular individual purpose. As Juno is an education-only platform, it is not regulated by the Financial Conduct Authority nor is its content protected by the Financial Services Compensation Scheme.