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I’m 23 with £20k in savings and dream of building a buy-to-let property portfolio. Where do I start?


Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance – your finance. These uncertain times have reminded us just how much understanding our money matters and yet… how little we talk about it and how much it’s shrouded in secrecy.
This stops now.
Keen to break that money taboo, we’re chatting all things personal finance from money saving tips to ISAs and pensions. Each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will tell her easy tips on exactly how to tackle it. So, grab a cuppa, take a seat, and let’s talk about money…

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Eliza* is a 23-year-old living in London, working on a graduate scheme in an insurance company. Here’s her money month…

I’m lucky enough to live at home in London, and I’ve been on a graduate scheme for three years, which is soon coming to an end so I’m on the lookout for a permanent job. I’ve been investing into a Stocks and Shares ISA for the last six months, and because of the gains and compound interest I’m hoping to retire early. I’m also lucky that my employer contributes the full 9% to my pension. I don’t plan to touch the money I’ve invested until retirement, although I know it’s restricting the amount I can save per month for a mortgage.

I’ve been buying and selling on eBay since I was around 13, and I’ve always been so driven to make money, which means I often justify luxuries and ‘treat yourself’ purchases. I absolutely love clothes, and have been transitioning my wardrobe over to more sustainable, ethically made clothes (which are often more expensive) and selling my old items. Although I’m buying less, I’m still spending a lot.

I feel so much pressure from my peers to finance a car, and rush into the property market. My ultimate dream would be to have a property portfolio, and have the rent along with other streams of passive income – although I wouldn’t know where to start! My Help To Buy ISA will reach £12,000 within a year, meaning I would get the maximum £3,000 from the government, although I don’t think I’ll be able to buy a house within a year. I’m debating opening up a Lifetime ISA, and maxing it out with £4,000 per year from my H2B ISA, just in case it takes me over 3 years to buy a house I would end up with a further £1,000 per year from the government when I actually buy.

I’d love some advice on the Help To Buy vs the Lifetime ISA, as well as how I get started towards building a property portfolio.

MY ACCOUNTS


Current account: £476
Savings account: £20,470 and £1,400 of shares in the company I work for

MY INCOMINGS

Annual salary: £34,611 pre tax; £26,412 post tax and deductions
Monthly wage: £2,884.30 pre tax; £2,201 post tax and deductions
Any other incoming payments: Typically around £200 from buying and selling on Depop/Vinted (varies month to month)

MY OUTGOINGS

Rent: I give my mum £250 each month towards bills
Other bills: Spotify, £9.99; Amazon Prime, £7.99; Netflix, £5.99; phone bill, £55.20
Other: £10 to charity, £400 into my Stocks and Shares ISA, £200 into my Help To Buy ISA, £10 into shares in the company I work for, £500 into my savings account
Splurges: £445 on a bag, £45 on my nails, £40 on laser hair removal
Weekly budget: I don’t set myself a budget, although I’ve started tracking my spending in a spreadsheet
What I spent this month: £1,829 in total including paying my credit card back in full

MY DEBTS

Student loan

MY MONEY THOUGHTS

What I want to save for: A buy-to-let mortgage
How I want to plan my money for the future: Investing for early retirement, and creating multiple streams of passive income
My worst money habit: No discipline when it comes to dipping into my savings!
My biggest money worry: Rushing into buying property, having no savings leftover and being left with all of the liabilities that come with home ownership!
Current money mood: 🙌 😬 🤔

WHAT OUR MONEY EXPERT ALICE TAPPER SAYS


1. Help to Buy vs Lifetime ISA
You’ve nearly maxed out your Help to Buy ISA**, but you’re wondering if the Lifetime ISA might be a better option. To recap on what the schemes are: with the Help To Buy ISA* the government will boost your savings by 25% with a maximum bonus of £3,000, whereas with the Lifetime ISA you can bag a 25% government bonus on up to £4,000 a year between the ages of 18-50. That’s a maximum bonus of £33,000!

There are pros and cons to both, and importantly for you, you can only put the bonus of one towards your first home. This means making a call as to whether you open a Lifetime ISA to use the bonus for retirement, transfer some of your H2B ISA into a Lifetime ISA and use either bonus on your first home or, if you have a few years to spare, aim to transfer all of your H2B ISA into a Lifetime ISA. As you can save a max of £4,000 each tax year in your Lifetime ISA and you’ve got £12,000 in H2B ISA savings, to make the transfer worth it you’ll need three years or more to transfer the lot and earn a bigger bonus. What this comes down to, is what you really want over the next one to five years. On that note…

2. Keeping up
You’re on track, you’re smashing your saving targets, you’ve got lots of great goals: retire early and build a property portfolio. You’re also 23 and have plenty of time to make all this stuff happen. It’s wise not to rush the big choices but I hear you… it’s easy to feel we need certain things to show everyone else that we’re financially secure; Gucci bag, house in the ‘burbs, car on finance. The irony is it’s often these very things that lead people to financial instability, not security. Take your time and think about what you really want for your 20s. Going on a sabbatical, doing that round the world trip or changing careers are all much harder when you’re mortgaged up.

3. Hello, taxman
If you’re a hobby seller on Ebay and Depop – that is, selling your own items second hand, not trying to make a profit – then the good news is you don’t need to tell the taxman. If however, your side hustle income is more than £1,000 this tax year and you’re selling items you’ve bought with the intention to sell, then you’ll need to register with HMRC and complete a Self Assessment tax return.

4. To let or not to let?
You’ve got property magnate aspirations (we love to see it), but before you head down the road of property portfolios and buy-to-lets, get really clued up on how to win at this game. Unfortunately the tax deal on buy-to-lets isn’t quite as tempting as it once was and unless you plan on managing the property yourself, an agent will be taking up to 20% of your rental income. You also wouldn’t be able to buy a buy-to-let property using your Lifetime ISA or Help To Buy ISA. That being said, it is a great way of getting invested in property and possibly growing your money (IF prices go up). The question is, what kind of investment do you want? Do you need income? Or is your money better invested in the stock market? For more, have a read of this buy-to-let property guide.

5. Open-banking FTW
If your spreadsheet ticks your box, be my guest but for a less time-intensive money management approach, you might want to check out open-banking apps such as Emma & MoneyDashboard to name two. Imagine one app which plugs into all of your different banking and investment accounts and then presents your data in a pretty dashboard. Some even help you to manage and delete your subscriptions. It’s basically Marie Kondo, but for your money.

Alice Tapper is the author and founder of Go Fund Yourself.
This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial advisor.
*Name has been changed. **The Help to Buy ISA is no longer available, but those who previously opened one can save into it until November 2029

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