Which account for my child's inheritance?

EstherSmyth

My son is 22 and an inveterate spender (the whys and wherefores of how this came to be are a whole other discussion). He has recently come into an inheritance which, through various policies and the sale of assets, could realise him nearly £100k.
Obviously I am concerned he will fritter this money away, and thankfully he is open to the idea of having a separate account in which to store his inheritance (but sadly is less open to the idea of ring-fencing it in a bond or similar). My question is this: does anyone know of any savings accounts (preferably high interest, of course) which allow multiple or capped annual withdrawals and which also allow deposits to be made from various sources rather than from one linked account only?

[Deleted User]

Maybe try the S&I board: https://forums.moneysavingexpert.com/forumdisplay.php?f=17

pinknsparkly

To answer your exact question, yes - there are accounts that limit the number of withdrawals you can make. Virgin Money is currently offering a Double Saver account that allows unlimited number of deposits (maximum £250,000) with an interest rate of 1.5%
https://uk.virginmoney.com/savings/products/double_take_e_saver_issue_10

I understand his desire not to have the money locked up long term in bonds, but would he be prepared to use notice accounts? These accounts require you to give X days notice (usually anywhere between 30 and 180) to get your money out but offer more interest. Currently OakNorth are offering a 1.77% accout, with a 90 day notice period.

Another option that would give more interest and might be appropriate depending on his reasons for avoiding bonds, but is more work would be setting up a "bond ladder", for example you could set it up this way:
- £20,000 in a 6 month bond
- £20,000 in a 12 month bond
- £20,000 in a 18 month bond
- £20,000 in a 24 month bond
- £20,000 in a 30 month bond
Using this approach, every 6 months he can access £20,000. If he doesn't want, or need it, then it can be reinvested into a 36 month bond (or shorted bonds if he's wanting to use the money to buy a house in the near future).

If he wants to use the money to buy a house and is a first time buyer, he may also want to consider opening a lifetime ISA - he can save £4,000 per year into it, and the government will add £1,000. However, if he takes the money out for any reason OTHER than to buy a house (which must be worth less than £450,000) or in retirement then he will pay a penalty fee and end up with less money than he put in!

He should also split his money across more than one bank, as the government only protects up to £85,000 per person per bank. Be aware that some banks are linked, so use this tool: https://www.moneysavingexpert.com/savings/safe-savings/#tool to check which banks he can save with that aren't linked

EstherSmyth

Thank you, Pink, for your comprehensive response. There's some fantastic advice in there, and I'm very grateful to you for taking the time to share it. The issue is - and I apologise if I didn't make this clearer - but he's incredibly incalcitrant when it comes to cash, and he absolutely hates me getting involved in his finances (stems from me being thrifty and him being a spendthrift!). Therefore, I think Virgin's Double Saver account will be my starting point until we reach the £85k cap, and then we'll look for somewhere else to deposit the rest - unless he blows it on a round the world trip first!
Thanks again.

sillyhilly

Some good advice already, however to play devil's advocate if you wouldn't mind...

- He's 22 years old. He's old enough to look after money and, ultimately, learn the hard way about frittering money away.

- One persons 'pointless' spending is another persons required spending.

- "Unless he blows it on a round the world trip first" - this doesn't sound like 'blowing it'. It sounds like he's using money to see the world and enjoy life. You can't take it with you.

- You can't ringfence it forever. As soon as it matures, he will access it and fritter it away anyway.

Why don't you compromise and ringfence half of it, and give him the other half to play with? Ultimately, it's his inheritance and he can really do what he likes with it.

Sea_Shell

The really sensible option is to put the equivalent of his annual salary into a pension for a couple of years...then he can't access until 55 (currently)

But then he IS an adult and you may have to back off "advising" or risk falling out over it.

cloud_dog

Does he own a property? If not, convince him to ring fence an amount and drip feed that in to Lifetime stocks and shares ISA (£4k pa) and HTB ISA (£2.4k pa - £1200 then £200 per month), that way at least he (you) know that some of it is being safeguarded for what you might consider sensible future spending, i.e. a house.

pinknsparkly

EstherSmyth wrote: »

Thank you, Pink, for your comprehensive response. There's some fantastic advice in there, and I'm very grateful to you for taking the time to share it. The issue is - and I apologise if I didn't make this clearer - but he's incredibly incalcitrant when it comes to cash, and he absolutely hates me getting involved in his finances (stems from me being thrifty and him being a spendthrift!). Therefore, I think Virgin's Double Saver account will be my starting point until we reach the £85k cap, and then we'll look for somewhere else to deposit the rest - unless he blows it on a round the world trip first!
Thanks again.

You're very welcome! Later posters have made the very sensible suggestion of looking into putting some of it into pension. I avoided making this suggestion as your post gave me the impression that he wanted to be able to access all of it at some point in the reasonably near future. But it would be a good idea to encourage him to think seriously about what he'd like to use the money for. House purchase, travelling the world and pension are all valid uses of the money but he is the only one who can make that decision!

Blackbeard_of_Perranporth

I am afraid that your son, being aged 22 and financially illiterate does not stop him from having long arms and short pockets. mind you, when his money has gone, you should not give him another penny!