Help to buy ISAs

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Riftus
Posts: 12
Joined: Wed Sep 25, 2019 8:10 am

Help to buy ISAs

Post by Riftus » Fri Nov 15, 2019 2:52 pm

UK

Are help to buy ISAs worth it or should I just put the money into investing?

Help to buy ISAs allow me to add 200 a month up to a max of 12,000 and when I buy I house the government pays an extra 25% ontop so I will get 15,000 to place a deposit on a house. Also it has a 2.5% interest rate. Is this worth it or would I be better placing it into a high risk investment since I am 20 and the money going into it is disposable.

glorat
Posts: 295
Joined: Thu Apr 18, 2019 2:17 am

Re: Help to buy ISAs

Post by glorat » Sat Nov 16, 2019 4:21 am

If you don't know, open one anyway and put 1 pound in. You've got two weeks to do this.

https://blog.moneysavingexpert.com/2019 ... ers-or-ev/

Valuethinker
Posts: 39043
Joined: Fri May 11, 2007 11:07 am

Re: Help to buy ISAs

Post by Valuethinker » Sat Nov 16, 2019 10:05 am

Riftus wrote:
Fri Nov 15, 2019 2:52 pm
UK

Are help to buy ISAs worth it or should I just put the money into investing?

Help to buy ISAs allow me to add 200 a month up to a max of 12,000 and when I buy I house the government pays an extra 25% ontop so I will get 15,000 to place a deposit on a house. Also it has a 2.5% interest rate. Is this worth it or would I be better placing it into a high risk investment since I am 20 and the money going into it is disposable.
Other than making sure you get the full employer max in your pension at your job, I would put the max pcm into this. This is a guaranteed return of 25% + 2.5% pa. Not much in the world gives you that.

Your employer has to put money into a pension on your behalf (public sector is different rules). 3% of your gross pay. You pay 4%, I believe (no choice) and government adds 1%. So that is 8%. However many employers match up to 5% and in some cases more, so it's worth getting that match (a 100% rate of return from when you start - granted you have to wait 35 years minimum before you can draw on it). So I usually tell people to do the pension first up to that point, then all extra savings into an ISA.

As glorat says, you do not have long to do this.

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