ISA or property?

[puzzleofapuzzle]

I have all my savings (£50,000-ish) in a stocks and shares ISA, which is growing reasonably nicely.

And, with rents rising and having had a fairly unstable life for a while, I'm craving owning my own property - just a small 1-bed place that I know is mine and I can always run to when I need to.

Financially speaking, would it be a bad move for me to use what's in my ISA as a deposit on a flat? I feel like as a financial investment over time, keeping it in the ISA will have it perform better, but I'm so done with renting...

I wouldn't buy property 'as a financial investment'. But it's usually perfectly sensible to buy it as a place to live.

Would you rent it out or live in it full time?

How much do you spend on rent per year at the moment?

If you can afford the mortgage, the up keep & your job is as secure as it can, then of course use your ISA as a deposit but i wouldn't use all of it, keep back 10k or so.
Renting is dead money long term & no security, regardless of the new renters act, the LL can still kick you on a whim.

I'd buy a house rather than a flat though.

And to use all your savings (which are currently invested and performing well) in order to get it?

@YellowRollercoaster I'd live in it. Rent per year has changed a lot for me recently – from 800euros a month at the start of this year (abroad) to about £300 a month right now (living with a friend while I figure out next steps), and about £1200 a month in the city I'm looking to move to.

Yes definitely buy. Historically property in the uk has been the best investment by far over the previous five decades, - even if this growth pattern slows you will still make big savings on your rent.

i think life’s too short, if you need somewhere to live then yes owning is nearly always better

Yes if you are renting, then definitely buy if you can afford it.

I think it’s ridiculous to have the money invested and be paying rent, unless the monthly return is more than the rent.

Wow, this is far more clear than I expected it to be!

I think there's something about watching the numbers rise in the stocks and shares that feels more real and tangible than it would in a property – but what you're all sharing here makes sense.

Thank you all!

Its one thing to be looking at the amount of returns in your ISA but then deduct the rent you are paying from that figure.
In your shoes I would buy. And it is a financial investment as well as a place to live.

Hi OP. I’m a professional investor. You’ve already had good advice but I’ll add some thoughts for the benefit of anyone else with a similar question.

1. The PP who said UK property has always been the best investment is wrong - it hasn’t, and moreover there’s very good reason to believe it’s going to do much less well over the next fifty years than the last fifty. This is important if you’re considering buy-to-let or similar.
2. BUT there are major benefits to owning your own home. In the UK those include big tax benefits, as well as the non-financial benefits of security, being able to choose your own decoration etc.
3. These benefits may be smaller in another country with different tax rules or a more secure rental market. They will also be less relevant if you plan on moving city or country every few years.

So yes, if you plan on staying in your next city for 5+ years buying may be a good idea. But it’s not always right for everyone, and you should be aware of the tax rules wherever you plan to move.

But remember investments may go down as well as up.
We don't have a crystal ball, but if there's a crash in whatever markets you're invested in how will you feel? Will you still have a decent house deposit?

If I had 50k in the bank I wouldn’t buy an investment property at the moment. But that’s not what you asked!

However I’d definitely consider using the 50k to buy my own house/flat to live in. I guess financially no one really knows whether your house will be more valuable than your ISA in 10/20/30/40 years. But in the meantime you have somewhere secure to live and your mortgage payments are often less than equivalent rent.

If you plan to move around then it’s probably not the best idea, but if you plan to be settled in an area for 5 years or so then buying within your means is usually a sensible move

I don't think you are comparing like with like.

If you were thinking about a buy-to-let investment v equities I'd say equities every time- historically better returns and much less hassle. But you are comparing your S&S ISA with buying a home, and that is something you shouldn't see primarily as an investment. For one thing, factors which drive when you buy and sell are more likely to be driven by your circumstances than by the market.

In your shoes I'd buy the flat but if possible leave yourself £5k invested. Having something there rather than nothing will inspire you to keep investing.

@MisoSalmonForLunch this is really useful food for thought – thank you. As much as I can imagine, I'll be staying in the UK now for the foreseeable, so it sounds like buying is probably smart.

I should add that there's also property in the family that's been set up to provide a pension etc. for me when the time comes, so this isn't my only route to security in the future. I just have very mixed feelings about benefitting from the family business and don't ever want to 'relax and rely' on that. It's important to me that I establish my own security outside and above that, for my own pride, for life curveballs, and for not taking privilege for granted.

I hope that's not a massive drip-feed...

@ErrolTheDragon absolutely, you're totally right. I think I've got enough time ahead of me to allow what I've invested to grow without being too buffeted about by crashes and ups and downs in the shorter term. And (I hope) I've been smart enough to spread the risk reasonably well. Of course there's always the chance of some mad disaster that wipes it all out, but I think if that were to happen we'd all have other things to worry about! 😅

Reading all your responses, the thought of this being something I could really do is feeling quite emotional this morning, actually. Just had to wipe away a little tear!

This year has been really tough and I'm craving a space that's all mine, that's secure, and I can relax into for the foreseeable. I guess it's important to think about how I want life to feel now too, and not just focus on protecting my future self – maybe that's just as much of an investment in myself as the money side of things.

The thing about a house vs some other assets is that even if its value changes it still has the value of 'a house in this location'.

It's actually a bit odd that in the U.K. we're encouraged to see property as an 'investment' that should increase value in real terms. A company can innovate and grow - a house is a house which needs maintenance and logically should depreciate ... but for supply and demand being out of sync.