18 year old daughter wants to invest

Zero_Sum

Sam2016 wrote: »

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.

The way it was worded sounded like she was looking to use the full allowance.
Of course you can put as little as you want in

DrSyn

1. Getting into the savings & investment habit at an early age is an excellent idea. Using up any tax shelters is another.

Cash ISA for an emergency fund, with with a Stocks and shares ISA for long term money sounds reasonable to me.

If she is in a job, she will likely be contributing to some kind of pension already.


2. I suggest that before she does any investing, she looks at both the videos below:-

http://www.kroijer.com/

https://www.ifa.com/indexfundsthemovie/


3. The following sites may be of interest:-

https://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

https://www.moneysavingexpert.com/savings/stocks-shares-isas/

https://lipperleaders.com/index.aspx

https://monevator.com/compare-uk-cheapest-online-brokers/

Malthusian

As you're not comfortable with investment terminology, wouldn't it make more sense for her to post here, rather than getting the answers second hand?

bowlhead99 wrote: »

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

Not to mention the possibility of getting 40% instead of 20% tax relief down the line if they are going to be in a higher tax bracket later. Never out of the question for anyone savvy enough to be asking about long-term investing when they are 18.

Naturally 20% taxpayers who hope to be 40% taxpayers later should still be making contributions now if they are getting employer matching. I'm just emphasising that putting money in a pension is reckless if the sole reasoning is "investing for the long-term is good, investing for the very long-term is therefore better" and ignoring more immediate financial goals such as getting on the housing ladder.

Paul_DNAP

bowlhead99 wrote: »

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 .

But this is exactly why it's good to lock it away. Better that than her trying to live on state pension alone which, if it even still exists when she retires. Having a nice comfy car in her 30s won't offer her much comfort when she's 80 years old and has to check her bank balance before turning the heating on.

wjr4

Personally, I'd be looking to contribute to a Help to Buy ISA/Lifetime ISA (I prefer the cash Help to Buy ISAs over a Lifetime ISA because of the higher interest rate and ability to withdraw without penalty). Most people want to purchase a property at some point and these accounts should be maximised first.

Secondly, start a regular saver (5% interest rate with places like First Direct) for an emergency fund. It is good to get into the habit of having sufficient money to use for things like annual car insurance (never pay monthly as the interest rate is usually high!) and having money to fall back on.

Once the above has been completed, then I would start looking at investing into a Stocks & Shares ISA.

I would not worry about putting too much into a pension at age 18 but definitely enough to maximise the employer's contribution.

webjaved

Zero_Sum wrote: »

Only looking at using ISA allowance?

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

Maybe the parents will be generous and foot the £20k. :rotfl:

A good point raised though. I think she needs to do more reading on investing, it's easy saying you are willing to take risks, but if the investment is going down, will she be comfortable then? It's all about balancing risks. As mentioned further up the thread, there are alternatives she needs to consider.

JoeCrystal

Sam2016 wrote: »

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 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... haha.

Thank you

Make sure that your daughter enrolled in a pension scheme to take advantage of the employer's contribution! If they match above the minimum, then bite their hands off!