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Setting aside savings for projects to make them happen

Planning expenses for the near future is important. Accurate financial planning helps meet all the family’s needs more easily. For example, planning a child’s further education or deciding to buy a house are two future projects that require having a significant amount saved up.

Let’s consider an example. Providing further education for a child without a loan requires substantial financial commitment, especially if you aim to give them the necessary skills to navigate an ever-evolving and increasingly competitive job market. According to our recent research, parents often pay over £5,000 a year to send their child to university.

Of course, this cost will increase should your child be selected to study at one of the UK’s top universities such as Oxford, Cambridge or the University of London, with tuition fees alone costing the government maximum of £9,250 a year. 

The same logic applies to housing. If you want to buy a house or move to a larger one, it’s necessary to plan your expenses ahead of time. Let’s take London as an example: the cost of buying a house is continuously increasing. On average, a property in London costs around £500,000. Prices of course vary based on the location.

Properties in Zones 1 and 2 will naturally be more expensive, but people looking to get on the property ladder for the first time could look at help to buy schemes and search in more affordable areas in the capital like Newham, Barking or Croydon. With the return of 0% and 5% mortgages, as well as a reduction in house prices this year in the UK, more people could afford to get on the housing ladder for less than in previous years.

But while we set aside the savings necessary to realise these two dreams, how should we best manage our capital? Leaving it idle in a current account exposes us to the effects of inflation, reducing the purchasing power of our money. This is why Moneyfarm has developed Liquidity+, which invests in a portfolio of money market funds managed by renowned asset managers. It is a low-risk solution that offers a gross annualised yield currently more than 5.3%* and a management fee of just 0.3% (+VAT) plus 0.1% of the underlying fund cost.

*Based on the weighted average of the gross yields regularly published by the money markets funds held in Liquidity+, as of  17 November, 2023.

Returns are sensitive to the Bank of England’s deposit rate fluctuations, with lower rates leading to lower yields and higher rates leading to higher yields.

Money market funds can be a great way to save for short-term goals. You can also capitalise on higher yields driven by the recent rate hikes.

As with all investing, your capital is at risk. Even though it’s a low-risk investment, this isn’t a cash product and there’s still a chance the value of your investments could fall and you might get less than you invested.

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*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.