20 years old, accident payout money. How should I save?

dbtor

I will be receiving £138k in ~3 weeks time, I will be "treating" myself/my gf and my family with a few thousand as i've been in pain everyday since my accident (November 2007) and my family/gf have helped a lot.

I'm currently unemployed and renting a flat with my girl friend who is at uni, I could live on the money for a long time but my plan is to get a full time job that covers the bills and save the money for a house/mortgage, is the best idea or should I get into the property ladder asap?

I will be looking to save around £100k and I don't think I will need instant access so would an ISA be the best option for a some of that money (£7,200 in shares or £3,600 into cash and £3,600 into shares?) What do you recommend I do with the rest?

My dad is very keen on shares as he thinks if you sell them at the right time you can normally make the equivalent of 6% interest.

My mum raves about premium bonds, are they worth looking into and if so how much would you put into premium bonds?

I'm reluctant to talk to a financial advisor as I know they will take a huge commission.

Any help would be appreciated.

Thanks

opinions4u

dbtor wrote: »

is the best idea or should I get into the property ladder asap?

I wouldn't rush on to the property ladder. Join it when you are good and ready to.

I will be looking to save around £100k and I don't think I will need instant access so would an ISA be the best option for a some of that money (£7,200 in shares or £3,600 into cash and £3,600 into shares?)

ISA limits increase to £5,100 (cash) and up to £10,200 (stocks and shares) on 6th April.

My dad is very keen on shares as if you sell them at the right time you can normally make ~6% interest.

You don't make interest on shares. You get dividends and make capital gains or losses. The value of a typical portfolio would have increased by around 50% in the last 12 months. But there were significant falls prior to this.

My mum raves about premium bonds, are they worth looking into and if so how much would you put into premium bonds?

Because the prize pot is relatively small, they are poor value in most circumstances.

I'm reluctant to talk to a financial advisor as I know they will take a huge commission.

A fee charging IFA who rebates commissions in to your investments would be a good idea if you're not intending to buy a property in the next 5-10 years. If you think a property purchase using your £100k is likely sooner rather than later, then there is probably little benefit to seeing an IFA, except to address any pension and protection needs that you have.

If you just need somewhere "safe" to put your money before you buy a property to live in, and you pay tax, then I'd suggest looking at:

- £3,600 in to a cash ISA this side of 5th April (e.g. Santander for rate, not service?)
- £5,100 in to a cash ISA after 6th April. (e.g. Santander?)
- The rest in to an appropriate mix of easy access accounts (e.g. The AA)and possibly fixed term fixed rate accounts if they provide you with a better rate and term. Keep your balances below £50k with each provider.

If you are happy to put some of the money in your girlfriend's name, you can double the amount going in to ISAs each tax year.

Take a look at sites like www.moneyfacts.co.uk to identify best rates.

Finally, read every page of the T&Cs before you sign up for an account and keep an eye on your returns and rates every 3 months or so, to make sure you are still getting the best return for your money.

dbtor

opinions4u wrote: »

You don't make interest on shares. You get dividends and make capital gains or losses. The value of a typical portfolio would have increased by around 50% in the last 12 months. But there were significant falls prior to this.

I understand, I meant it was equivalent to roughly 6%

opinions4u wrote: »

If you are happy to put some of the money in your girlfriend's name, you can double the amount going in to ISAs each tax year.

Unfortunately she has an ISA of her own... I think.

Thanks, i'll look into Satander ISA and moneyfacts.co.uk

Annisele

Have you received any legal/financial advice on the money at all?

I ask because you might be better off putting it into a Personal Injury Trust - and if you're going to do that, you have to put the money directly into the trust (i.e. you never personally receive the money).

Are you receiving any benefits at the moment / are you likely to be receiving any in future in view of your injuries? A lump sum of £138k might reduce those benefits.

cyclonebri1

opinions4u wrote: »

I wouldn't rush on to the property ladder. Join it when you are good and ready to.

.

I mght, not the worst option at present and certainly a lesser risk,

dbtor

Annisele wrote: »

Have you received any legal/financial advice on the money at all?

I ask because you might be better off putting it into a Personal Injury Trust - and if you're going to do that, you have to put the money directly into the trust (i.e. you never personally receive the money).

Are you receiving any benefits at the moment / are you likely to be receiving any in future in view of your injuries? A lump sum of £138k might reduce those benefits.

The problem with the trust is that I owe various people ~£11k and I want to pay that off asap.

I was receiving income support for a while but I decided it was pointless as I would have to pay it back anyway and my parents gave me money as/when I needed it as they knew I could pay them back.

I'm currently only on housing benefit which is about £15/week and I don't mind losing that, I don't think I will be on any benefit in the future.. at least I hope not.

PosterBoy77

I would consider using National Savings Index Linked certificates. You can buy 15K of each issue, and there are two on sale at any one time. Also, at the moment we know new issues arrive at the beginning of April, so you can deposit 30k now and another in April. The certificates are 100% secure, and will guarantee that your money grows with inflation tax free. You could put another £3600 into a cash Isa before April and another £5100k in April. You could place the rest into a one or two year fixed rate bond, perhaps a bit longer. You can withdraw money from index linked certificates without any significant penalty after the first year.

To me this money seems not to be money you can afford to loose, so it would be unwise to invest in shares.

Annisele

OK, but it's probably worth finding out exactly what benefits you're entitled to before you do something that might make you ineligible for them. I'm also a bit confused about the "paying back" of income support?

Putting the money into trust doesn't necessarily mean that you can't get the money out again (though I'm no expert). The rules on PI trusts are odd, or at least they used to be, but you might want to take professional advice as to whether you'd be able to withdraw £11k reasonably quickly to pay debts.

Obviously I know nothing about your circumstances, but an accident severe enough to leave you in pain for three years and generate a compensation payment of £138k might well have left you in a position where you can claim benefits.

dbtor

mikael wrote: »

I would consider using National Savings Index Linked certificates. You can buy 15K of each issue, and there are two on sale at any one time. Also, at the moment we know new issues arrive at the beginning of April, so you can deposit 30k now and another in April. The certificates are 100% secure, and will guarantee that your money grows with inflation tax free. You could put another £3600 into a cash Isa before April and another £5100k in April. You could place the rest into a one or two year fixed rate bond, perhaps a bit longer. You can withdraw money from index linked certificates without any significant penalty after the first year.

To me this money seems not to be money you can afford to loose, so it would be unwise to invest in shares.

Sounds very interesting, I have some time to read up about all the possibilities before I get the money and this one seems very good but I won't have £30k to save until mid April I'd rather save and possibly earn no interest ("Because inflation fluctuates, you won’t know exactly how much you are going to receive until your Certificates mature" - http://www.nsandi.com/products/ilsc) than put into shares and risk losing money that will eventually be for something important like a house.

Annisele wrote: »

OK, but it's probably worth finding out exactly what benefits you're entitled to before you do something that might make you ineligible for them. I'm also a bit confused about the "paying back" of income support?

Putting the money into trust doesn't necessarily mean that you can't get the money out again (though I'm no expert). The rules on PI trusts are odd, or at least they used to be, but you might want to take professional advice as to whether you'd be able to withdraw £11k reasonably quickly to pay debts.

Obviously I know nothing about your circumstances, but an accident severe enough to leave you in pain for three years and generate a compensation payment of £138k might well have left you in a position where you can claim benefits.

I've tried to get every type of benefit i'm meant to be eligible for and the best I can do is £15/week housing benefit which I don't have to pay back.

To answer your earlier question no I haven't had any advise at all, only a few telephone calls to my dad discussing some options to investigate and reading a few topics on here.

foreign_correspondent

Personally, I would buy a house - you have to live somewhere - why be paying a landlord rent when you could buy outright? Prices are relatively low at the moment compared to what they were a couple of years ago, and they will start to rise at some point!

greenface

are you not entitled to DLA or IB ?
We dont know your circumstances but your income support will now be stopped anyway but you maybe entitled to some Check it out see a benifit advisor