What should my son do with £8,000?

mrspepperpot1

My son stands to inherit £8,000 in May. He is a full time student and wondering what would be the best thing to do with this money? An ISA? If so which one? I think that would only involve some of the money so what to do with the rest? He wouldn't want to tie it up for too long as he finishes uni in a year and is still undecided about what to do. Perhaps tie up some for longer but not all? Please help any advice will be gratefully received. I'm new to this forum so please explain in layman's terms!!!!

Many Thanks

JamesU

My son stands to inherit £8,000 in May. He is a full time student and wondering what would be the best thing to do with this money? An ISA? If so which one? I think that would only involve some of the money so what to do with the rest? He wouldn't want to tie it up for too long as he finishes uni in a year and is still undecided about what to do. Perhaps tie up some for longer but not all? Please help any advice will be gratefully received. I'm new to this forum so please explain in layman's terms!!!!

A lot can change with the savings accounts between now and May and it is too soon to plan ahead. Probably this is why you have not had a reply yet, so here we go…


(i) In May 2010, check ISA and savings accounts on a good comparison website such as Moneyfacts and also keep an eye on the Moneysavingexpert pages as the best rates are often given here too.

(ii) Find a cash ISA account that pays the best interest rate fixed for a year at most, or if you prefer the best fixed interest rate with easy access and invest £5100 into it (correct allowance this May). Either way the money is then accessible when your son wants it in just over a year’s time. Your son can reassess what you want to do with this cash ISA the following May 2011.

(iii) Find a savings account in the same way as described in (ii) above and invest £2900 into it (or e.g. £2600, see (iv) below). He can reassess what he wants to do with this savings account the following May 2011.

(iv) Maybe consider spending £200-300 (on a keepsake that does not cost the earth but is a nice reminder of the person involved, or a short trip/holiday etc). Inheritance is not just about money but also a personal loss and it is sometimes nice to have a permanent reminder of this.

(v) Depending on what your son would like to do with the money in May 2011, he may want to reinvest or transfer the cash ISA to a new one in May 2011 for some financial security until he is working rather than studying. Interest rates may well have improved by then too. He could also add the £2600 to the new cash ISA that he decides upon.

(vi) It is also possible he may want to make use of part of the £2600 in the savings account towards his work and career after studies (clothes for interview and/or work? Towards a car/bike for work? Deposit on accommodation if working away from home etc?). If some of the money is spent furthering his work and career this is the best investment he can make! And he can always then save back the £2600 when he is earning rather than studying.


I am not a financial expert but hope these ideas help.

mrspepperpot1

Thanks for all your suggestions and for keeping it simple !! You've been of great help!