Should you rent or buy? We do the maths

A recent report found that the average 20% deposit in London is approaching six figures, up £30,000 in ten years. Yet property price growth is slowing, particularly in London. So should you buy, or keep renting? Here's the back-of-the-envelope maths: 

So, if you want more flexibility than property can provide, what else could you do with that deposit, even while you're saving?  

Invest for income

Equity income funds pay around 4% (though the income is not guaranteed). You get capital growth if the stock market rises. If you keep this in an ISA, it's all tax free. See our recommendations here

Put it in your pension

Stop yawning. Increasingly it is becoming clear that millennials may have to make a choice between saving for retirement or saving for a property. Maxing out a pension pot may be a more realistic option. First thing to check is whether you have a workplace pension (you should have) and to max out savings into that. Then consider opening a personal pension – here are the ones we like.

Other investment options

If you're not keen on some tedious belt-and-braces guy in a suit telling you to invest in British Petroleum:

  • Crowd funding: there are a list of them here 
  • Seed capital: look at becoming an Angel Investor here
  • Cryptocurrencies (though we remain very unsure about this last one).

Given low interest rates, think twice before throwing everything into a house deposit.

Read next:

Rent or buy? We answer our users' questions

Easy Money or Dangerous Debt? The truth about Innovative Finance ISAs


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