Savings and Investments thread

Friend Or Defoe

I love reading all the nonsense on here about how it was just as hard to get on the housing ladder back than then it is today. I bought in the 00s with a 7% mortgage, saved for years, made loads of sacrifices, it wasn't easy then and it's never been easy, but it's far harder for young people today. 

cantersaddick

Rob7Lee said:

cantersaddick said:

Rob7Lee said:

cantersaddick said:

Rob7Lee said:

cantersaddick said:

Lets frame this another way the people that lived in our house before us were able to buy this house as their first home he was a postman and she didnt work. They were able to have 3 kids be mortgage free in a couple decades and live here most of their lives.

For us its a very different prospect, we both had to be working in high paid high demand roles fitting in the HENRY 60% tax trap category and still needed family help even after a decade of saving (outlined above). We needed over £100k saved to cover deposit, stamp duty, fees etc. plus more for initial works to make the house safe. 

And that was for a standard 3 bed starter home in suburban south east london (hardly a sought after bit of town) that needed completely ripping out and fully rennovating. Finances are still a massive factor in whether we have kids or not. 

That level of change in a generation for the same standard of living is wild. 

You’re in danger of sounding like Gary.

my postman George (at a guess early to mid 30’s) moved from a flat in Erith to a 3 bed semi in Eltham. He’s managed to buy a family home for him, his wife and young child.

I do think it’s a shame that there is this narrative that getting on the housing ladder is difficult to impossible. Whilst is is (impossible) for some, and difficult for most, especially around the SE, far too many I feel give up too easily before they have begun. I know a number of people my wife works with who quote that narrative, yet (as I did with one) you go through the numbers and a 3-5 year plan (including managing spending!) you find it is possible (no one is saying easy).

I work in an industry where there is no reason that 95% of the youngest that join at 18 or 21 can’t buy a place by around 25/26. Generally they all do eventually, just takes some a long longer to do so than others, those who start the saving with their second pay check (I generally tell them to blow the 1st) are good to go by 25, others only realise at 25 that they’ve spent the last 4-7 years wasting decent money.

My daughter 26 and her boyfriend have saved enough to put down at least a 35% deposit on a £450k house. Yes helped by living at home with parents, but even if they hadn’t the last couple of years they would have still saved enough for a deposit.

and no offence on this, but if you and your wife are both earning north of £100k each, saved for over a decade and got help (I assume you are talking about financial help) from family, what sort of mansion do you live in, in your surburbia starter home….. that needed work to make it safe!?! Time for @golfaddick

I'll bet Georges wife is working too though. 

I agree that its not impossible for a lot of people and that some do give up too easily. But equally dimishing the challenges and the clear intergenerational inequality being created by this inheritocracy system as a "narrative" when it is very real and being felt by a majority of people in that group is dangerous. Just look at the inequality protests happening across Europe right now. We should not dismiss those concerns. 

On your last point there was obviously wage progression in that decade of saving, I thought that was clear by the earlier references to promotions. Much of that period we were on much lower grad scheme salaries while we saved. or even lower while we studied. It then took working through the levels as quickly as possible to get there. We both got there around the time we bought our house (think it might have been a little after for me) which was what enabled us to borrow enough. Its a standard 3 bed semi.


As I always say on here none of my views are to benefit me personally. I'll be absolutely fine. I have a house, investments and 2 high incomes and a whole bunch of safety nets. At some point we will inherit decent sums from remaining grandparents and parents. I have no worries about me personally (well beyond the existential threats...). Its not about me. Its about society, people I know who are stuggling, people I dont know, single parents, disabled people, those in temporary housing, people in the care system. The people who "life happens to" and leaves them worse off through no fault of their own.

No idea if his wife works or not. He's a bright lad, assume he does overtime as he's often the postie who delivers parcels in the van at the weekend, for all I know he may have another job as well.

On intergenerational inequality and specifically wages - at 18 (1990/1991) I worked for a Lloyds syndicate, I remember it vividly as I started on £5016 the end of 1989 at 16 and then a bit over a year layer got almost a 20% rise putting me on exactly £6k. £6k in 1991 to today (BoE inflation calculator) becomes £14,880. We pay our 18 year old apprentices pretty much to the pound double that.

I'm now somewhat confused by your own personal situation examples, 2 x £100k+ wages, a house, investments and a whole bunch of safety nets and planned inheritance, yet your finances are still a massive factor on whether to have kids or not?

I do think there has become a widening gap for the young, mainly between themselves though and the vast difference (and I hate this term but gives the idea) of the haves and have nots. Unemployment for under 25's is out of control really and a lot needs to be done there or there will be a huge swathe of a whole generation struggling (as there is no way benefits can continue as they are). We also need to do much better than University being the main option at 18.

We need to give the young opportunities, but as I often quote when I'm speaking to groups who come in for work experience days, equal opportunity doesn't automatically mean equal outcomes, one of the reasons I am not a fan of private education.

Unfortunately anecdote =/= data. You are well aware that average salaries have not kept pace with inflation for decades as we've done this one plenty of times before.

On my personal circumstances. It's like you've missed the point of the entire conversation and the meaning of the HENRY term. 

High tax rates, plus graduate tax an extra 9%, plus repayment of masters loans for us both means that take home pay doesnt reflect headline salary. Last few pay rises for either of us have barely moved the take home. Ability to borrow is calculated off headline salary doesn't take into account deductions. A huge mortgage which its interest rate just more than trebled. Just drained savings and borrowed a bit to do this extension on the house, significantly more cash needed to finish other works on the house. Disposable income isn't enough to feel like we would be able to do justice to raising the next generation. We would be ineligible for any childcare scheme so the cost of that would be as much as a mortgage all over again per child, or one of us would have to drop at least 50% of our hours losing massive amounts of income. 

Yes we have safety nets. Safety nets that others don't always have in the sense of family who would look after us or we could live with or in the sense of critical illness cover etc. I said "We will be fine" in the context of relative to people who are genuinely struggling. We will always have somewhere to live, never be at risk of homelessness and we have in demand skills so will always be able to get a job even in an AI world. 

Unfortunately your last paragraph is a bit out of date. It's a 2004 talking point - thats when that line was actually being used in politics and it was at the time a gebuine conversation to be had. Things have moved so far since then. If you think there is anything close to equality of opportunities out there anymore you're delusional. Social mobility has dropped off a cliff in the last 20 years. In the vast majority of cases for a child born now their social class is decided the day they are born. And that is the fundamental problem.

My last paragraph wasn't suggesting we have achieved equality of opportunity (in fact I was making the point we haven't, i.e. why I don't really agree with private education as it is probably the biggest stifle of equal opportunity for young people).

People often assume equal opportunity results in equality of outcomes, it doesn't. I'm sure we all know many people who had equal opportunity/upbringing but have seen very different outcomes. I often talk to groups who come from underprivileged backgrounds, that point resonates with them, in that we can flip it to be just because they haven't had the same opportunity (i.e. education opportunity) as someone else doesn't mean they have to have worse outcomes. They may just have to do things differently to get to that place. We need to stop putting people in buckets based on accident of birth and saying that means they can't do well, yes as a society we need to do more but there is also personal responsibility.

If you honestly both earn north of £100k and even take off gross your student loans (which at that level will be paid back pretty quickly), then no offence but at those salary levels (or even take 85% of) you should really be very well set up financially. You must be clearing towards a 5 figure sum between you a month, top of the DINKY's, so you shouldn't need worry about doing justice to raising children or need help with childcare.

The bit in bold worries me a lot. Its become a Farage talking point in the last year or so and has been repeated in the likes of the mail and telegraph opinion pieces repeatedly. It makes out that the problem of social mobility is a psychological one and that if we would just stop talking about it suddenly people would be able to change their situations. And whilst there will always be a few anecdotes of where that might work in reality the problem is systemic. Areas with the most need have the worst infrastructure, worst service provision, worst schools, worst healthcare etc etc.

If we look at it from my area of focus at work (health and welfare) your IMD decile at birth determines your life expectancy and more importantly healthy life expectancy. That then determines the number of years you are dependent on the NHS in later life (for the most deprived decile this is the last 3rd of their life) and therefore how much of your life you are able to work - for the most deprived decile this point comes 20 years before the least deprived and almost all of that falls when they are of working age. As a result of the systemic issues mentioned above these people experience the longest waits for planned care and the longer you spend on a waiting list the less likely you are to return to work (can't remember the stats off the top of my head but have quoted them on this thread before) and the more likely you are to develop mental health needs as well. Its a funnel that can catch people from all walks of life but some are being actively pushed towards it. We need to address these systemic issues before we can put it down to personal responsibility. And to solve those systemic issues we need to talk about it more not less!

This talking point has been used to justify a lack of action on social mobility and even preventing actions.

On my personal circumstances you've ignored the cost side of things. Huge mortgage and rates trebled. And yes obviously weve been saving but some tied up in pensions and investments and weve just emptied out savings into work on the house. A lot more needed on the house in the next 2 years too.

And the childcare costs these are the same as a mortgage PER CHILD if you don't get the 30 hours free and still work full time. That's not affordable in the next 2 years if we want to finish the house. And that's before we talk about maternity pay. 

You're also underestimating the student loan factor a lot. I remember you saying your daughters didn't need the system so understandable if you don't know how it works. Let me put it this way - I've paid back pretty much what I originally "borrowed" but now "owe" 19k more than I originally borrowed. It is a loan only in name, it is structured to be a 30(or 40 depending on age) year graduate tax other than for those with rich parents. I got particularly unlucky in that as my earnings grew interest rates were soaring and so it took me a hell of a long time and a wildly high salary to even cover the interest. Without lump sum early repayment I'll likely pay back 3-3.5 times what I borrowed depending on what rates do. Masters loan is another 6% graduate tax on top. Bit at least this one is whittling down and there is an end in sight. 

Add these stealth taxes to income tax and NI plus factor in my work place pension contributions and my marginal take home is 8p in the £.