What are pros and cons of UK Building Societies compared to banks?
they may be willing to issue mortgages with smaller deposits, but may take longer to make a decision That cannot be farther from the truth. If you are getting a mortgage on a smaller deposit, you will be paying a higher interest rate. Time to take a decision depends very much on your credit situation, earnings, spending and the amount of loan you want to avail of. advantages and disadvantages compared to banks today Nothing specifically that is obvious. You deposits are guaranteed by FSCS, which is primarily everybody's biggest concern. One thing I did observe was they generally have saving accounts which pay better than the big banks, but that is for one to compare and find out.  In ownership structure you own a part of the building society because you are a member by having an account(bank/mortgage) with them. Not the case with a big bank though unless you own any shares. You can make a case for the difference of the big bank's multiple business as compared to a building society.
"Read the prospectus carefully. In the case of Prosper, you're really making a loan to Prosper, which is in turn linked to the borrower's payments. Also, the rates are really high. If I was looking for money, I'm not sure why someone with ""AA"" credit would ever go with a Prosper loan." This is a very good question! The biggest difference is that when you put money in a savings bank you are a lender that is protected by the government, and when you buy stocks you become an owner. As a lender, whether the bank makes or loses money on the loans it makes, they still maintain your balance and pay you interest, and your principal balance is guaranteed by the government (in the USA). The bank is the party that is primarily at risk if their business does not perform well. As an owner, you participate fully in the company's gains and losses, but you also put your money at risk, since if the company loses money, you do too. Because of this, many people prefer to buy funds made up of many stocks, so they are not at risk of one company performing very poorly or going bankrupt. When you buy stock you become a part owner and share in the profitability of the company, often through a dividend. You should also be aware that stocks often have years where they do very poorly as well as years when they do very well. However, over a long period of time (10 years or more), they have historically done better in outpacing inflation than any other type of investment. For this reason, I would recommend that you only invest in the stock market if you expect to be able to leave the money there for 10 years or more, ideally, and for 5 years at the very least. Otherwise, you may need to take the money out at a bad time. I would also recommend that you only invest in stocks if you already have an emergency fund, and don't have consumer debt. There isn't much point in putting your money at risk to get a return if you can get a risk-free return by paying off debt, or if you would have to pull your money back out if your car broke down or you lost your job. There are two impacts: First, if the pound is dropping, then buying houses becomes cheaper for foreign investors, so they will tend to buy more houses as investments, which will drive house prices up. Second, in theory you might be able to get a mortgage in a foreign country, let's say in Euro, and you might hope that over the next few years the pound would go up again, and the Euros that you owe the foreign bank become worth less. Looks more like an idea for a business rather than an actual business -- especially since it hasn't even launched. That said, it does have its merits. What bank actually holds the deposit funds becomes irrelevant, and may actaully change from time to time as they forge better partnerships with different banks.  Think of it like a mutual fund -- the individual stocks (if there are stocks) in the fund are less important than the balance of risk vs. income and the leveling of change over the course of time. It offers services banks offer, without fees (at least that is the proposal) with the addition of budgetting capability as well. It does have downsides as well There is an increased level of indirection between you and your money. They propose to simplify the banking business model, but in fact are only hiding it from you.  The same complexity that was there before is still there, with the added complexity of their service on top of it.  It's just a matter of how much of that complexity you would have to deal with directly. With that in mind, I would reiterate that they are not a business yet -- just a proposed business model.  Even the sign up process is a red flag for me.  I understand they need to gauge interest in order to forge initial relationships with various banks, but I don't see the need for the 'invitation only' sign up method.  It just sounds like a way to increase interest (who doesn't like feeling exclusively invited), and is a bit too 'gimmicky' for my taste. But, like I said, the idea has merit -- I have my reservations, but will reserve full judgement until they are an actual operating business. I wouldn't go into a stock market related investment if you plan on buying a house in 4-5 years, you really need to tie money up in stocks for 10 years plus to be confident of a good return.  Of course, you might do well in stocks over 4-5 years but historically it's unlikely. I'd look for a safe place to save some money for the deposit, the more deposit you can get the better as this will lower your loan to valuation (LTV) and therefore you may find you get a better interest rate for your mortgage. Regards the pension, are you paying the maximum you can into the company scheme?  If not then top that up as much as you can, company schemes tend to be good as they have low charges, but check the documentation about that and make sure that is the case. Failing that stakeholder pension schemes can also have very low charges, have a look at what's available. My understanding is you can create a company 0 value. Then you need to either loan the company the money to buy the building (it will still have 0 value as it will have a debt equal to it's assets) or sell share to investors at any price you like to raise the money to buy the building.  Once shares have value (as valued by a chartered accountant - not anyone can do this) then anyone recieving shares will have to pay income tax. This is why keeping the shares as no value for as long as possible can be preferable. Also a benefit of using share options. talk to your investors, see what they require. Aggressively paying of Mortgage is better. If you have more cash available [assuming you have covered all other aspects i.e. emergency funds, retirement etc], the only question you need to ask is where will you invest and what returns would you get. So if your mortgage is say at 5%, if the spare money can get you more than this, its beneficial, if its in Bank CD with say near zero interest, its not worth it. However if you are sure you can make 10% returns on the investments, then go ahead and don't pay the mortgage aggressively. Everyone understands the necessity of those bailouts today. But I still contest that they were a net negative for the common man and a HUUUUUUUUUGE positive for the bank executives. In fact, the fallout from it - the conceptualisation of TBTF and GSIB etc - is basically a blank check for these banks. Oh yes, so many stringent regulations that we know for a fact that these banks will flout at the first opportunity available to them. And then, assuming it doesn't bring the global economy to its knees, someone will slap a billion dollar fine on them and let them go on their merry way. Depends on how urgent your need for the emergency savings might be. If the money market account allows you to get your money in the same amount of time as the savings account then there is no real downside, but if the account takes a few days for you to access and you need your money sooner then you probably shouldn't. Also money market accounts DO give more interest than most savings accounts, but the interest rates are generally still pretty low, so it might be an improvement, but probably not a huge one "The purpose of taking a ""secured loan"" is to build credit. This might be done by someone who had a bad stain on their credit history such as a bankruptcy or foreclosure, or possibly by someone just out of school (presumably with few or no student loans),and no credit history. Not everyone needs to, or should do this, however. The advantage for a borrower is that s/he gets to create a record of repaying a loan that will partly mitigate the bad credit history. The advantage for the bank is that it is ""no risk,"" because the savings account is the security for the loan. That would make it willing to ""lend"" to a bad credit risk." "To answer your first part, its not an opposition to profit. It's an opposition to usury - the practice of charging excessive interest on loans. There are extensive passages in the Qur'an condemning the practice, and in many cases ""excessive interest"" is any interest. To the second part of the question, these may well be more risky investments. But if you're trying to build a strong and thriving community financial spirit, one might expect there to be significant social pressures to use the loaned money responsibly. Additionally, while it removes some of the penalty for failure, it doesn't remove the rewards for success. The incentive is still there to succeed. It's merely the penalty for failure is no longer financial ruination. It may also temper the incentive for banks to give money to riskier borrowers, but rather to prudently invest in ventures with an acceptable amount of risk. The question as to whether or not this is a ""house of cards"" likely depends on the questioner. Whether or not this is also true for the western banking system likely remains to be seen, but it hasn't exactly been doing a sterling job of convincing me it isn't true for the past decade." There are two answers to this (excluding central banks which are really just a banks to private banks):  **Please note:  This is an oversimplification and not accounting for the fact that banks operate in both categories now.  **  Banks are either depository institutions or financial service/transaction providers.  *  Depository institutions are your typical retail bank (regions, boa retail, wells fargo retail, etc).  They accept deposits from account holders and lend out via reserve lending to mortgages and business loans for their revenue generation.    * Financial service/transaction providers are better known as IBanks.  You have your Goldman Sachs, Deutsche Bank, JP Morgan, Morgan Stanley, etc.  These have traditionally been banks that do not accept deposit accounts but revenue generation comes from financial services such as asset management and research or from financial transaction facilitation such as market making (offering both buy/sell quotes in capital markets).  This is generally the role that banks have played historically from the medieval ages on... They started out as being entities that provided access to connecting buyers and sellers of markets. "Depending on where you live in the UK, buying a house sooner might be a better option. I would echo the advice about putting some money away into a ""rainy day"" fund etc. above but I know that in my area house prices are going up by around 7% per year. I bought a house two years ago and I'm paying 4% interest on my mortgage so I'm effectively making money by owning my house.  Given that you want to buy a house soonish, if your money sits in an account somewhere making no interest, you're effectively losing 7% of your cash each year by not keeping up with house prices, meaning you'll be able to afford a smaller house with the same money. Do bear in mind though that buying a house costs around £4k in lawyers fees, surveys, mortgage setup fees etc. and selling a house can be more since estate agents will take a % of the sale cost. If you live somewhere where house prices are not increasing as quickly then this will not be as good an option than if you live in e.g. London where house prices are currently skyrocketing. If you don't want to live in the house, you may be able to do a buy-to-let as an investment. Generally the rent will cover the mortgage payments and probably a letting agent/property management company's fees, so while you won't see any actual net income, the people renting will be paying the mortgage off and you'll be building equity on the home. It's not entirely without risk though as tenants can trash homes etc." If you havent yet maxed out your ISA, then its a no-brainer. You get excellent tax rebates and its silly not to take advantage of these before considering self investing in shares.   Note that even if your ISA is maxed out, the economic turbulence means that investing in individual stocks is an intimidating place for beginners right now.  The FSA is also looking at revising the average percentages used for pension, from 7% for adventurous investments, down to 5% or 6%, so there is industry wide recognition that on average the stock market is going to be a little less lucrative than it was a few years ago. Thats not to say you cant still make a whopping profit, but the chances of you doing so as a first time investor are remote to say the least. My advice would be to look seriously into some of the social lending sites, where you can still easily get a 7% return with minimal risk. Whilst I do have a portfolio which is performing well overall (I am a very speculative investor), I am moving a lot of funds into Zopa.com, as I am averaging 7% return with a lot less time, effort and risk than the stockmarket.  Whatever you decide, I think its time you thought about consulting an IFA. They can help you understand what sort of risk you are willing to tolerate, which is a very important aspect of investing. My motivation was to see what other people thought. I know I have my own bias so I would rather see what other people thought.   One of the points I took from Ferguson was that money not being used is less valuable than money being used. In that sense a bank creates real value in an economy by allocating money to people who need it at a specific moment from those who do not need it at that moment.  I see so many threads and comments on reddit about how banks are purely evil institutions that have no benefit to society so I guess I just hoped to see some insight from the finance community, but also to see a discussion about banking from people with opposing opinions.  Thanks!