How best to invest £28,000 to fund university but with a second signature

Jo_Whittingham

I have a 16 year old due to start university in September 2006/7. Unbeknown to her presently, she is beening given £28,000 to help fund her uni. education. Where is the most sensible place to save this money for her, in her name, with immediate access at intervals when needed by her, but also with with a second signature for security so that no one else can encourage her to spend unwisely - I have not to date found a custom made account for to cover this scenario? Please advise. Sincere thanks :
Jo

Robert_Sterling_3

If someone gives your daughter some money then the money belongs to your daughter. What she does with the money is up to her.

Jay-Jay_4

Probably stating the obvious here but could you just set up a Direct Debit from the savings account into her current account for whatever she needs per month, then tell her to come to you for any big purchases?


She'd have to come to you for transactions anyway.

If not then you could open a joint account that is 'both to sign'.

deemy2004

Jo_Whittingham wrote:

I have a 16 year old due to start university in September 2006/7. Unbeknown to her presently, she is beening given £28,000 to help fund her uni. education. Where is the most sensible place to save this money for her, in her name, with immediate access at intervals when needed by her, but also with with a second signature for security so that no one else can encourage her to spend unwisely - I have not to date found a custom made account for to cover this scenario? Please advise. Sincere thanks :
Jo

You would open a joint savings account with two signatories.

There are numerous.. Try some of the smaller BBS like derbyshire who seem to give better customer service than the likes of Halifax or Abbey where they waste your time by getting you to call a bloody number and then wait a week or more for an appointment !

Debt_Free_Chick

Would it not be a good time to use this to teach her about budgeting, saving etc?

Otherwise, there's a danger that she has a huge windfall to spend when she leaves Uni, which might "defeat the object"

lipidicman

Debt_Free_Chick wrote:

Would it not be a good time to use this to teach her about budgeting, saving etc?

Otherwise, there's a danger that she has a huge windfall to spend when she leaves Uni, which might "defeat the object"

My sentiments exactly, I knew all about saving when I was ten years old and avoided student debt by budgeting and part-time work. A windfall like this should make life easier if it is managed propely.

A joint account might affect the tax status of the interest (ie if you pay tax)

Maybe you could go for an internet account like the alliance and leicester at 5.35% but YOU could withold the pin from your daughter. Then you could log in and move money to her current account - and the interest would still be paid gross as it is her account. Without the pin you cant login and access the account

The only problem is that this might break the terms of the account. If say you defrauded her then the bank wouldnt be able to help her. But since the account can only pay into her current account then there isnt much that you could do.

Hope that helps - but check if it is OK, does anyone know if my idea breaks the rules?

Jo_Whittingham

Lipidicman - many thanks for response - i shall enquire further...


:T

lipidicman wrote:

My sentiments exactly, I knew all about saving when I was ten years old and avoided student debt by budgeting and part-time work. A windfall like this should make life easier if it is managed propely.

A joint account might affect the tax status of the interest (ie if you pay tax)

Maybe you could go for an internet account like the alliance and leicester at 5.35% but YOU could withold the pin from your daughter. Then you could log in and move money to her current account - and the interest would still be paid gross as it is her account. Without the pin you cant login and access the account

The only problem is that this might break the terms of the account. If say you defrauded her then the bank wouldnt be able to help her. But since the account can only pay into her current account then there isnt much that you could do.

Hope that helps - but check if it is OK, does anyone know if my idea breaks the rules?

almahadeus

Jo_Whittingham wrote:

I have a 16 year old due to start university in September 2006/7. Unbeknown to her presently, she is beening given £28,000 to help fund her uni. education. Where is the most sensible place to save this money for her, in her name, with immediate access at intervals when needed by her, but also with with a second signature for security so that no one else can encourage her to spend unwisely - I have not to date found a custom made account for to cover this scenario? Please advise. Sincere thanks :
Jo

I think you should sit down with your daughter and decide what to do with the money TOGETHER. I don't think going behind her back and opening an account where she would need your signature to access HER money is the way to go. If it was me I would resent the fact that my mum didn't trust me.

There are many ways this money could help and I personally think it would be a waste sitting in a savings account being spent a little at a time on everyday living expenses until it's zero. That would prob take a few years only as uni is very expensive.

If it was me I would probably get a mortgage in your name (mother's name) using some or all of the money as a deposit, put the deeds in your daughter's name, and let your daughter live in the house and rent out other rooms to fellow students, thereby covering the mortgage and hopefully making a bit of profit each month. It's better than her paying to rent someone else's house- money thats going down the loo each month! In the long term hopefully the value of the house will have increased by the time she has graduated and she can sell it for a profit.

She'll have to be responsible then because it will be her house that she and her mates are living in. What better way to learn about responsibility than taking control of your finances and future?

lipidicman

Some people are cut out for this at 18, and others are not. Living with other people and renting can be a real learning experience. When you own the house the stakes are higher - your friends becoming housemates is hard enough - when you rely on them financially it can be a real nightmare. Better to let out to students you dont know and keep your friends. Either way you can miss out on a lot. My girlfriend bought a house at 18 (on her own!) in her home town and commuted to uni whilst letting out to more local students. It has worked for her - the house is paid for and she has tripled her investment but she missed out on 'university life'

Another issue is that with house prices at or near their peak in some areas this might not be as good an investment as in the past. It does also rather tie an 18 year old down. Some of the money might be better spent on something like a year out which is hard to do later in life.

almahadeus

Whilst I admit it wouldn't suit everyone, I don't agree that it means she'll miss out on university life- she can still have a good time at uni- you don't have to get drunk and trash houses to enjoy yourself at uni. May be I'll agree to disagree with you there lipidciman.

lipidicman

I didnt mean getting 'drunk and trashing houses'. I meant that I learned a lot by sharing a house with four friends as equals. The experience isnt the same if you are the landlord. The hassle and responsibility can be a lot to deal with! You end up with all the bills, your tenants have a relatively easy life, compared to if the responsibility was shared.

I said that my girlfriend did exactly what you suggested. So I agree with you that for some people it can work (financially at least)- but there are downsides. For other people it would be a complete nightmare!

I dont think we need to disagree, just weigh up the pros and cons!