18 year old daughter wants to invest

Sam2016

Hi

My daughter has a part time job, she wants to begin her investing journey now. She’s happy to take risks, should we only be looking at using up the isa allowance and should that be a cash or stock and shares ISA? Would investing in an index fund or similar also be an option for good returns and encouraging the habit of a regular monthly deposit?

Any recommendations and help very welcome, and please no finance jargon... ha ha.

Thank you

Aminatidi

Suggest she read this and if she can do so just drop a small regular amount in a simple global tracker or multi-asset.

https://theescapeartist.me/2015/10/20/downton-abbey-compound-interest-and-teaching-your-children-to-be-rich/

enthusiasticsaver

She needs to learn about investing and risk profiles before delving into it. She say she is happy to take risks but would she be comfortable with seeing her capital drop by 20% or more? Does she have other emergency savings? Starting to invest at an early age is to be encouraged but at 18 she is just starting out and needs to educate herself first and decide why she is investing. It is not a get rich quick scheme.

A stocks and shares isa could be the way to go but so could a Lisa or a pension or even a regular saver. Only by finding out her objectives is it possible to know which route to take.

Do you know about investing yourself?

Zero_Sum

Only looking at using ISA allowance?

Where is a part time 18 year old getting £20k from?

Friday1989

If she's planning to buy a house in the future then a Lifetime ISA makes sense. You can pay in up to £4000 a year and the government adds 25%. The drawback is there's a penalty for withdrawing the money for anything other than a first home or after you turn 60. There's both cash and stocks and shares LISAs. I don't understand enough about stocks and shares ISAs to say anything useful. I'm with Skipton (cash ISA) and happy.

Flobberchops

If she's interested in investing as opposed to simply saving, then yes a Stocks and Shares ISA fits the bill. I would encourage her to diversify though, possibly splitting her money between a Lifetime ISA, S&S ISA, and an instant access account (which may or may not be an ISA) in whatever proportion she sees fit.

elephantrosie

i wish i were in her shoes!
by all means, yes, do let her invest! please please please do not discourage her. we need more people like her

Sam2016

Zero_Sum wrote: »

Only looking at using ISA allowance?

Where is a part time 18 year old getting £20k from?

Do you need to save 20k a year to benefit from an ISA?

Even if she paid 1k a year into a LISA or a stocks and shares ISA I would have thought that's a good route to begin with since she is of this mindset.

Sam2016

enthusiasticsaver wrote: »

She needs to learn about investing and risk profiles before delving into it. She say she is happy to take risks but would she be comfortable with seeing her capital drop by 20% or more? Does she have other emergency savings? Starting to invest at an early age is to be encouraged but at 18 she is just starting out and needs to educate herself first and decide why she is investing. It is not a get rich quick scheme.

A stocks and shares isa could be the way to go but so could a Lisa or a pension or even a regular saver. Only by finding out her objectives is it possible to know which route to take.

Do you know about investing yourself?

I understand it's not a get rich quick scheme and so does she, but she is showing interest so I want to help show her how to harness the power of compound interest and then make it happen. I think she just wants to save regularly and for the long term. In her words..she wants to start saving for her pension, but I need to sit with her to be clear on whether she always wants to save for rainy days... a house etc. I think that if she can just get into the habit of saving for the long term and then save another amount maybe into an ISA/regular saver that might be what she needs.

My husband and I have used a financial planner to help us with our own planning - we invest in index funds plus have ISA's etc for what we save for kids and other savings. I may also speak to him about her too.

A_T

what about putting into a SIPP? she'll thank you when she's 60!

bowlhead99

A_T wrote: »

what about putting into a SIPP? she'll thank you when she's 60!

If she isn't cursing you when she's 25, 30, 40, 50 etc for suggesting she lock the money away and make it unavailable for life's other challenges such as buying a car, a property, relocating for a job opportunity, bringing up children etc

To gain experience in investing relatively small amounts when young and seeing them grow into something you can usefully use - by being able to practically spend it on something in your life - S&S (non pension) investing is hard to beat; or LISA investing towards a property in the medium term. If you have grown your non pension wealth you will still be able to afford to fund pensions later, when it may even be more lucrative (employer matching etc).