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  • FIRST POST
    • silvermum
    • By silvermum 7th Oct 17, 8:16 PM
    • 125Posts
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    silvermum
    Ideas for investing £70k now for uni in 2018?
    • #1
    • 7th Oct 17, 8:16 PM
    Ideas for investing £70k now for uni in 2018? 7th Oct 17 at 8:16 PM
    My son inherited some money from his grandfathers estate a few years ago. It has been held in trust ( I was a trustee), but he is 18 in a few months and I want to help him decide what to do with it in preparation for him going to Uni in 2018. He is pretty level-headed and we've already agreed that I will help him manage his finances for the next few years at least.

    He has 1/3 share of a property (rented out) which gives him about £420 month (currently saved into an JISA)
    There is about £20k in the JISA (75% cash, 25% funds)
    And £50k in a child savings account which matures on his 18th.

    He is happy to keep his share of the property (I manage the tenancy) but we're not yet sure what to do with the rest?
    We obviously need a rolling plan which will maximise the return for the next 12 months but leaves things open for him to draw an income (or some capital?) to fund himself through university.
    Not yet sure whether it will make sense for him to get a student loan, as he may be a high income earner in the future, based on his degree choice.

    Thoughts so far include:
    - putting £20k into an adult S&S ISA by April 2018 & remainder into Santander/NS&I (but these would be earning less than inflation...)
    - putting £40k into ISAs over next 12-18 months, into income unit trusts.
    I feel the market is current high/due for a crash though, so am concerned about investing large sums over a short time frame.

    Any thoughts?
Page 1
    • xylophone
    • By xylophone 7th Oct 17, 8:59 PM
    • 23,065 Posts
    • 13,368 Thanks
    xylophone
    • #2
    • 7th Oct 17, 8:59 PM
    • #2
    • 7th Oct 17, 8:59 PM
    Lifetime ISA?

    https://www.moneysavingexpert.com/savings/lifetime-ISAs
    • silvermum
    • By silvermum 7th Oct 17, 9:36 PM
    • 125 Posts
    • 49 Thanks
    silvermum
    • #3
    • 7th Oct 17, 9:36 PM
    • #3
    • 7th Oct 17, 9:36 PM
    Thanks, but I'm not sure how this would meet the objective we're trying to achieve?

    Because my son already has 'an interest' in a property, and will become part-owner when he turns 18, he would not be able to use a LISA for a future house purchase, so would probably have to return the 25% bonus?
    • chockydavid1983
    • By chockydavid1983 7th Oct 17, 10:38 PM
    • 440 Posts
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    chockydavid1983
    • #4
    • 7th Oct 17, 10:38 PM
    • #4
    • 7th Oct 17, 10:38 PM
    For any money that needs to be accessible during uni, this should be held in the best available current accounts and regular savers.
    For longer term savings, a S&S ISA should be considered and it's never too early to contribute a bit towards a pension. For those starting out, look at multi asset funds as these give good diversification across countries, sectors and asset types.
    But if he would be looking to buy a house within 10 years with any of this cash, that money shouldn't really invested. I think you're right about the LISA, in this case the best current account and regular savers would be best.
    • george4064
    • By george4064 7th Oct 17, 11:04 PM
    • 843 Posts
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    george4064
    • #5
    • 7th Oct 17, 11:04 PM
    • #5
    • 7th Oct 17, 11:04 PM
    I would go ahead and open a Stocks & Shares ISA for him.
    "If you arenít willing to own a stock for ten years, donít even think about owning it for ten minutesĒ Warren Buffett

    Save £12k in 2016 - #045 £10,358.81/£12,000 (86%)
    Save £12k in 2017 - #003 £9,136.98/£12,000 (76%)
    • enthusiasticsaver
    • By enthusiasticsaver 7th Oct 17, 11:56 PM
    • 4,405 Posts
    • 8,161 Thanks
    enthusiasticsaver
    • #6
    • 7th Oct 17, 11:56 PM
    • #6
    • 7th Oct 17, 11:56 PM
    If he needs some of the money in 2018 then he should be saving rather than investing.

    Has he done a budget so he knows what income he will need each year of his degree? He could apply for the loan (in fact he probably should) just in case his earning capacity is not as large as expected. He can always repay it after he graduates if he has sufficient. If he works out the income he will receive from the BTL and student loan he will know what shortfall to keep back. A stocks and shares isa would then be a good option.
    Countdown to early retirement on 21.12.17 3 months to go.
    • kidmugsy
    • By kidmugsy 8th Oct 17, 12:14 AM
    • 9,660 Posts
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    kidmugsy
    • #7
    • 8th Oct 17, 12:14 AM
    • #7
    • 8th Oct 17, 12:14 AM
    F it's never too early to contribute a bit towards a pension.
    Originally posted by chockydavid1983
    Oh yes it is. He should wait until his pension contributions harvest an employer's contribution.

    Use high interest current accounts and regular savers as much as possible. Tie nothing up in long term stuff e.g. S&S until his plans are clear, and probably not even then. His property is a long term investment already, and that's probably quite enough for the time being.

    Suppose he were to do a three year degree. Allowing £9k for fees and (say) £9k for maintenance (we'll ignore his rental income) then he'll burn through £54k. If he did a four year degree, £72k. Or he might want to do a masters degree, or legal training, or whatever. £70k doesn't look so large, does it?


    Because the interest rate charged is higher than he can earn on cash (or, quite possibly, investments) student loans are unattractive for someone who expects to have to pay it all back. So in his shoes I'd be tempted to spend my capital on avoiding such loans. He'd want to keep his eyes on the news, though, in case the terms become more attractive.




    "Interest Rates ... Undergraduate loans ...

    Income Contingent Repayment Loans for post - 2012 - (Plan 2) loans
    From 1 September 2017 until 31 August 2018 ...

    Whilst studying and until the April after leaving the course RPI+, plus 3% (6.1%)
    From 6 April after leaving the course until the loan is repaid in full Variable rate dependent upon income. RPI (3.1%) where income is £21,000 or less, rising on a sliding scale up to RPI +3% (6.1%) where income is £41,000 or more ....

    Postgraduate Loans (England and Wales)
    From 1 September 2017 until 31 August 2018, the interest rate for borrowers in England and Wales taking out a Postgraduate Loan for a Master's degree will be 6.1% (RPI + £3%)."
    • xylophone
    • By xylophone 8th Oct 17, 11:20 AM
    • 23,065 Posts
    • 13,368 Thanks
    xylophone
    • #8
    • 8th Oct 17, 11:20 AM
    • #8
    • 8th Oct 17, 11:20 AM
    In your son's particular circumstances (having inherited a part interest in a property), it may be worth investigating whether he would still be accounted a "first time buyer" for LISA purposes.
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