I intend to take my first step on the home ladder in a year and to use all my investments as a deposit.
I want my investments to grow as much as possible by then, but I don't want to risk losing a significant part of it so close to buying a house.
What is the best way to divest in advance?
It is sometimes difficult to resist the temptation to keep money invested until the last minute
Myron Jobson says this Money says: Buying is only half the investment process. Knowing when to sell to crystallize paper yield is equally important.
This may sound obvious, but many investors stumble over the fact that they don't know when and how to do it last.
It is sometimes difficult to resist the temptation to keep invested money for the potential of falling inflation – especially to regain profits after a period of underperformance amid stormy markets.
You have not provided any details about your investment portfolio, but you may be one of the many investors who were overwhelmed by strong currencies in the fall of last year.
You could try to recoup your losses by staying invested, but it is quite possible that just as you raise the money, the value will be reduced by 20 percent or even more if markets fall.
There is an often-quoted statement in the investment community that reads: & # 39;Time in the market, not timing the market is the most important. & # 39; One reason for this is that predicting movements in the stock market in the short term is extremely difficult.
With only a year to go before you need the money, it is even harder to know when to sell your investments and what the best approach is to take.
To help you get started, we have asked two investment experts to share their thoughts.
Jason Hollands of Tilney says that stock market fluctuations are difficult to predict
Jason Hollands, of the investment management company Tilney, answers: Although I am pretty positive about the outlook for markets this year after a tough run in 2018, anyone who is likely to need access to their cash within a short period of time such as a year – for example, to pay off a mortgage or to Depositing On Real Estate Financing – Really Should Start Taking Risks From The Table Well Before This.
In the short term, markets can be very volatile and the truth is that such fluctuations are very difficult to predict and are often provoked by surprise news events that trigger sudden changes in sentiment.
The last thing you want is that the value of your investments suddenly shift dramatically to the point that you are about to pull the trigger to buy a house. It can blow a hole in your plans.
Nobody knows for sure whether markets will go up or down in the coming month or quarter, so my suggestion is to take a phased approach, either monthly or quarterly in cash, but start as quickly as possible while the markets are in reasonable shape .
After a scorching end to 2018, the first quarter of this year has seen a substantial recovery, especially since the US Federal Reserve Bank has indicated that it will not raise interest rates again quickly.
But there are still many uncertainties – Brexit is one – but also about how long the American economy can continue to grow. It is already on the eve to record the longest economic growth ever and nothing will always go in one direction.
Ray Black of Money Less Financial Services says selling the investments that have given you the best return
Ray Black, from the chartered financial consulting firm Money Minder Financial Services, adds: In the first instance, look for the investments that have yielded you the best returns that I suspect are American and European funds that you have invested in over the past few years.
The US market has delivered exceptional returns over the past seven or eight years, although 2018 was not so good.
If you have some American investment funds, this is certainly the first place I would consider divesting and then the European funds.
Although UK markets currently represent good value, there is no guarantee that they will gather before you have to spend the money.
Ultimately, your own risk attitude will determine the action that you are currently taking and if you have an aggressive risk attitude, you can choose to stay in the markets and hope for a little more growth, but you should understand that this may just not happen .
Even worse, if markets fall 10 percent or 20 percent between now and when you need the money, how would you feel?
Would that mean that you would not have enough money left to buy a property?
Then it might be better to disinvest everything in one go and settle for a low but certain interest in the coming 12 months to preserve your capital.
As you undoubtedly know, there are no guarantees what the future will bring and Brexit, trade wars, global debt and talking about possible recessions are constantly in the news.
Even if markets seem to be on the rise, they can go down quite quickly and you don't have time to stay invested and wait for the values to recover – unless you like to postpone your house surrender?
If you are not, I would suggest protecting your capital now and not beating yourself if you miss out on some growth. At least you still have your down payment for your house.
Consider opening a Lifetime Isa if you have not already done so
Myron Jobson adds: It can also be worth putting money into a Lifetime Isa if you haven't already.
Savers between the ages of 18 and 39 can put up to £ 4000 per tax year in a Lifetime Isa and receive a government surcharge of 25 percent that is paid into their account every month.
This means that you can get an additional £ 1,000 from the government in the next 12 months for your down payment to buy a home. This should not be sniffed at.
There are, however, a number of conditions.
You cannot use the balance in a Lifetime Isa to buy a house for 12 months after opening. In addition, 25% tax is levied on money or assets taken from a Lifetime Isa if they are not used to purchase your first home (you always lose more than you contributed).
There are not many of these products – especially if you prefer to invest in cash rather than in shares.
In your case, it is probably best to take £ 4,000 from your investment portfolio and place it in a cash Lifetime Life Isa, where the amount gets a fixed interest rate (the highest rate of 1.1 percent is offered by Newcastle Building Society) on top of the generous 25 percent government bonus.
Investing the money is just too risky at this stage. This is because, as a rule of thumb, investments must be held for at least five years to have enough time to drive the inevitable ups and downs in the market for a smooth return.
Here you will find more information about Lifetime Isas.