Note the following content is intended to be educational but it does contain promotional material for Kaldi. 

Buying a house is a big dream for many. In fact, in the UK, you could say home ownership is the equivalent to the American Dream, such is our desire to own bricks and mortar. But for many, it feels like an unrealistic ambition due to ridiculously high house prices. Like, come on. How much for a one-bedroom flat in London? Half a million pounds? HALF A MILLION POUNDS? 

Seriously though, even in areas around the UK where a garage space won’t set you back six figures, getting a deposit can feel like climbing a mountain. Like, the tallest, most ridiculous mountain you’ve ever seen.  

There is some good news, though. Kaldi's here to help you reach your goal faster, no matter how high it seems. Our unique approach combines cashback rewards directly into investments, smart budgeting tools and flexible saving options. It’s a combo that very well could speed up your house-buying journey. Here's how: 

1. Cashback that grows: Every purchase nudges you closer to your dream home as your rewards can automatically become investments. 

2. Budgeting with a boost: Our tools help you trim expenses and redirect more money towards your goal - whether that's boosting your investment contributions or building up your deposit. 

3. Flexible saving strategies: Adjust your approach as needed, balancing between longer term investing and building a solid cash deposit. 

This way, you're making progress on multiple fronts while turning everyday spending into investments, optimizing your budget and tailoring your savings strategy to your unique situation.

Let’s find out more.  

The house-buying challenge 

We promise we’re not trying to start you off on a downer, but for a moment let's take a second to acknowledge the challenge of saving for a house in today's market. House prices have gone up and up and up for years, often significantly outpacing wage growth. 

To give you a real illustration: 

• In 2004, the average UK house price was about £152,464. By 2024, this had soared to around £262,902, a staggering increase of 72.4% over 20 years. 

• In contrast, average wages have grown much more slowly. In 2004, the average annual wage was around £23,900. By 2023, it had only risen to £34,963, an increase of 46.3%. 

Now, you don’t need us to tell you that a 46% increase in wage just doesn’t work when house prices have increased by nearly three quarters. There’s a real affordability issue, which is why so many government officials from all sides acknowledge that there’s a housing crisis in the UK. 

For many people, particularly first-time buyers, getting together a deposit can feel like a non-starter. The increasing house price-to-income ratio means that a greater proportion of an individual's income is required to purchase a home, with average mortgage payments now taking up a larger percentage of take-home pay than in previous decades. 

And let’s not forget the cost of renting, which has gone up by a whopping 26% since Covid. More expensive house prices, a cost-of-living crisis and  higher rents have made it final boss-level hard to buy a home.  

How investing can help you buy a home 

Okay, that’s enough bad news for today. While all these bottlenecks to homeownership can seem demoralising, it only highlights the importance of finding extra ways to save smarter for aspiring homeowners.   

While traditional savings accounts and Cash ISAs are safe bets, their returns might not keep pace with rising house prices.  Not to mention savings account interest rates are high right now which won’t be the case forever, especially as the Bank of England recently lowered the base rate (that is good news for your mortgage, though). 

So how do you make smart money investments that can put you on the way to getting on that much-coveted property ladder? Well, you could start by putting your money to work in the stock market, which has the potential to see your savings grow more quickly over time. 

Here's a quick comparison to illustrate the potential difference: 

• If you'd put £10,000 in a Cash ISA back in 2011, it would be worth just under £12,000 today. 

• But if you'd invested that same £10,000 in a higher-risk index fund, you could be looking at around £33,000 now. 

That's a difference of £21,000. Not too shabby when you're trying to build up a deposit for a home. Note that this is just one example, admittedly during a period of historically low interest rates and past performance is no guide to future returns. Source 

The power of long-term investing 

As much as we’d all like it to be, investing isn't a get-rich-quick scheme. But it can be beneficial to your home-buying goals over time. For example: 

Between January 2012 and December 2023, a higher-risk index fund could have increased your savings by about 230%. 

That works out to an average annual return of 10.64%. 

Of course, it's important to remember that past performance doesn't guarantee future results. The stock market can be unpredictable, and there's always a risk you could get back less than you put in. Historically, however, over longer periods, the stock market has tended to provide higher returns than savings accounts. 

Understanding the risks involved 

Before we go further, it's necessary to consider that investing comes with risks. Unlike a savings account where your balance only goes up (albeit slowly), investments can go down in value as well as up. This is why investing is generally recommended for longer-term goals, as it gives you time to ride out the ups and downs of the market. 

The goal is to find a balance between risk and potential reward that you're comfortable with. And do you know who helps with this? One guess. Go on… that’s right, Kaldi. 

How Kaldi can help 

Everything just seems to be getting harder these days, but there is reason for optimism. At Kaldi, we make investing so easy you can practically do it with your eyes closed by offering access to investing through our partnership with fund providers, including Vanguard, Fidelity, Legal & General and HSBC.  

Vanguard’s LifeStrategy® 100% Equity Fund is an example of a higher-risk option that aims for long-term growth (the kind of growth that might help you buy a house). But that's just one option. We also offer a range of investment choices to suit different risk appetites and goals. 

Here's how Kaldi makes investing for your house deposit simpler: 

• Start small: You can begin investing with as little as £1. This means you can dip your toe in the water without committing a large sum upfront. 

• Regular savings: Set up automatic transfers to keep your investing on track. This can help you build the habit of regular investing, which can be powerful over time. 

• Easy management: Monitor your investments right alongside your everyday spending in the Kaldi app. This gives you a holistic view of your finances, making it easier to track your progress towards your house deposit goal. 

• Flexibility: You can adjust your investment strategy as your timeline or goals change. Life doesn't always go to plan, for better or for worse, and your investment approach should be able to adapt. 

• Educational resources: We provide plenty of information to help you understand investing better. Knowledge is power when it comes to managing your money. 

Let Sally tell you about saving with Kaldi to buy a home 

It's all well and good talking about what you can do, but let’s take a look at a practical example oh how Kaldi could help. Meet Sally, who has some serious dreams about buying her own home. 

A 23-year-old accounting assistant, Sally is determined to overcome the challenging London rental market and save for her first house by her early 30s. With an annual income of £35,000 and armed with her BSc Hons degree, she's making smart financial moves to turn her homeownership dreams into reality. 

But how is she doing it?  

Sally has got onboard with Kaldi's approach to saving and investing through shopping. She's not just relying on cashback; she's making the most of every feature to boost her savings. Each month, she invests a total of £230, broken down like this: 

• £164 from Kaldi's auto-saving features 

• £40 from linked accounts 

• £26 minimum in cashback on regular spending 

• £15 monthly referral bonus from tapping into her network

She’s making the most of Kaldi’s features. Check out how effective getting her family involved can be through linked accounts. Her mum and granny are supporting her efforts by adding their cashback and round ups to her fund. 

Because Sally’s a super saver she’s making the most of Kaldi’s 0.5% referral bonus on up to 5 friends spending, reloading new referrals at the end of the 3 month limit. We’ve assumed they spend £200 per month on Kaldi each, earning Sally a total of £15 extra each month.  

Most importantly, Sally's decided to put her money into investments. With top features like auto roundups and monthly sweeps, saving becomes automatic, meaning Sally is well on her way to achieving her homeownership dream.  

And she's a prime example of how Kaldi can be much more than just a cashback tool and turn into the platform for young professionals like Sally who want to take control of their financial future without having to dedicate hours every day thinking about it. 

Remember that this is just an example and actual returns could be higher or lower. The key takeaway is that by investing regularly and letting compound returns work their magic, Sally could potentially reach her house deposit goal faster than through saving alone.

Compound returns?  

Compound returns is when your money makes money, and then that new money makes even more money. It's like a snowball rolling downhill, getting bigger and bigger as it goes. We go into it in more detail in one of our other articles. 

Making the most of your Kaldi account 

To give your house-buying goals the best chance, consider these tips: 

• Set a savings goal: Use Kaldi's goal-setting feature to track your progress towards your house deposit target with a house building animation so you can see yourself getting closer to your dream of owning a house. 

• Analyse your spending: Use Kaldi's spending categorisation to identify areas where you might be able to cut back and save more. 

• Take advantage of cashback: As a Kaldi customer, make use of the cashback offers to boost your savings. 

• Make the most of tax-free returns: Consider using Kaldi's ISA or JISA options for your investments. These tax-efficient wrappers can help your savings grow faster by sheltering your returns from tax, potentially accelerating your journey towards your house deposit goal. Worth noting that tax treatment depends on personal circumstances and is subject to change in the future.

Why a diverse approach matters 

While investing can potentially help you reach your house deposit goal faster, it's important to maintain a diverse approach to your savings. Here's why: 

• Emergency fund: Always keep some money in easily accessible savings for unexpected expenses. 

• Short-term vs. long-term: If you're planning to buy a house in the next year or two, keeping your deposit in a different investment vehicle, like a Money Market Fund, might be more appropriate. Investing in stock market Index Funds is generally better suited for longer-term goals. 

• Risk management: By spreading your money across different types of savings and investments, you can manage your overall risk. 

Financial education and its importance 

Knowing about money and how it works is half of the battle, but it’s not something that is actively spoken about in the education system or even general family chit-chat. So we thought it’d be a good idea to give you the lowdown about the Benjamin’s (okay, we’re not in the US, but saying ‘the Charles’ doesn’t quite have the same ring to it). 

With a ton of resources (like, loads) and a super simple way of saving and investing money, we’re doing everything in our power to help you understand investing better. Because if you do it right, houses, cars and perhaps even early retirement may well follow suit.  

So, whether it’s a little in-app explainer or an article just like this one, we’re here to make you feel comfortable reading about money, talking about money and making the right choices with money. Because the more you understand about investing and personal finance, the better equipped you'll be to make decisions that put your financial future in a good place.  

‍Summing up: keys to your new home 

There’s no guaranteed fast track to homeownership, as much as we wish there was. But investing with Kaldi could potentially help you build a deposit more quickly than relying on savings accounts alone.  

With a splash of compounding and dash of long-term thinking, you might just find yourself reaching that house deposit goal sooner than you thought possible. 

The journey to homeownership is a marathon, not a sprint. And they do say the journey is half of the fun, so get planning, use the right tools (ahm, Kaldi) and you go and work towards that goal of owning your own little humble abode.  

Kaldi has your back every step of the way. 

[Disclaimer: The figures mentioned are based on Vanguard's LifeStrategy® 100% Equity Fund as a representative higher-risk index fund. Total returns are listed before fees (illustrative fund total fees are approximately 0.37%). Cash ISA calculations are based on average rates. Investing carries risk - the value of your investments can go down as well as up, and you may get back less than you put in. This article is for informational purposes only and does not constitute financial advice. Always do your own research and consider seeking independent financial advice before making any financial decisions.]