Saving advice for my daughter

jeannot18

Hi people, I have read a few posts on this forum but I would still need some help. This is for my daughter. She is planning to remove her money from the bank she is with (saving account with the Halifax) as it does not bring hardly any returns. She is planning to put £5k to start with, and pay in around £200 to £400 per month. She won't need the money right away so it can be tied up for a while. She is looking a minimum 3 to 5 years. From the posts i have read so far, i picked up Vanguard and HSBC portfolio option. Could anyone comment on this. The investment will have to carry a low to medium risk.  I have a few questions.

1. The fees that you pay, is it every time you pay money in (ie every month)
2. Tax wise, are these products like an ISA , for example she is a tax payer at the lower rate, do you pay tax on returns

Apologies for the probably stupid questions but i know nothing about investment as such. TIA

J

eskbanker

If you don't understand investments then frankly you're not really in a position to offer her advice on the subject - to be honest, if she wants to familiarise with the subject then she needs to do so herself, otherwise it's the blind leading the blind (no offence)....

jeannot18

eskbanker said:

If you don't understand investments then frankly you're not really in a position to offer her advice on the subject - to be honest, if she wants to familiarise with the subject then she needs to do so herself, otherwise it's the blind leading the blind (no offence)....

I have no intention to offer advice to my daughter as such, hence why i am here asking questions about the 2 products i have found after reading some posts on this forum. So if one needs to read tons of materials before committing, what is the other option? Take a financial adviser and let him/her invest the money for her? I thought that products like the ones offered by Vanguard or HSBC was taking the task of learning all about investments.

eskbanker

jeannot18 said:

eskbanker said:

If you don't understand investments then frankly you're not really in a position to offer her advice on the subject - to be honest, if she wants to familiarise with the subject then she needs to do so herself, otherwise it's the blind leading the blind (no offence)....

I have no intention to offer advice to my daughter as such, hence why i am here asking questions about the 2 products i have found after reading some posts on this forum. So if one needs to read tons of materials before committing, what is the other option? Take a financial adviser and let him/her invest the money for her? I thought that products like the ones offered by Vanguard or HSBC was taking the task of learning all about investments.

No, I wasn't advocating engaging an adviser - DIY investing is entirely appropriate for many and in any case it wouldn't be cost-effective to deal with a FA at that level anyway.  The point I was making was that DIY investing requires a decent amount of understanding and realistically this entails research, whether on here, or on other sites, or by reading books on the subject, etc, and it's the one doing the investing that needs to understand it, not a well-meaning parent.

xylophone

She is looking a minimum 3 to 5 years. 

For investments, 3 to five years is a very short time span.

Is your daughter saving for any particular purpose? Is she over 18? Does she yet own a property?

Is a LISA relevant to her circumstances?

Regarding a stocks and shares ISA using Vanguard funds only see https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0001&gclid=EAIaIQobChMI4KvS1qvC5wIVmK3tCh2-eA31EAAYASAAEgJH5_D_BwE&gclsrc=aw.ds

and this could be worth a read. https://monevator.com/using-vanguard-lifestrategy-funds-life/

More reading  a book by John Edwards.

DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing 

and https://moneytothemasses.com/saving-for-your-future/investing/the-best-stocks-and-shares-investment-isa-the-cheapest-fund-platform

jeannot18

xylophone said:

She is looking a minimum 3 to 5 years. 

For investments, 3 to five years is a very short time span.

Is your daughter saving for any particular purpose? Is she over 18? Does she yet own a property?

Is a LISA relevant to her circumstances?

Regarding a stocks and shares ISA using Vanguard funds only see https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0001&gclid=EAIaIQobChMI4KvS1qvC5wIVmK3tCh2-eA31EAAYASAAEgJH5_D_BwE&gclsrc=aw.ds

and this could be worth a read. https://monevator.com/using-vanguard-lifestrategy-funds-life/

More reading  a book by John Edwards.

DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing 

and https://moneytothemasses.com/saving-for-your-future/investing/the-best-stocks-and-shares-investment-isa-the-cheapest-fund-platform

She is 21, lives at home with us. She does not really have any plan as such but I guess like anyone else, she is going to want to get on the property ladder at some stage. She is quite careful with her money and just wants her money to work better than what she is getting right now. I will start reading from the link you have posted, thank you very much for that.

bostonerimus

Having money in the bank is a good thing. So I would advise your daughter to keep 6 months spending in the bank; pay off any high interest debt like credit cards; contribute to a workplace pension if she has one and when all that is done open a stocks and shares ISA or maybe a LISA - a simple and inexpensive way to go would be with Vanguard and hold something like VLS80 in it. Two other things to do are to do a budget so she can see where to save more money and to educate herself so she knows why she is buying VLS80 and what to expect.

jeannot18

bostonerimus said:

Having money in the bank is a good thing. So I would advise your daughter to keep 6 months spending in the bank; pay off any high interest debt like credit cards; contribute to a workplace pension if she has one and when all that is done open a stocks and shares ISA or maybe a LISA - a simple and inexpensive way to go would be with Vanguard and hold something like VLS80 in it. Two other things to do are to do a budget so she can see where to save more money and to educate herself so she knows why she is buying VLS80 and what to expect.

Thank you bostonerimus, she has ~7K but wants to keep some for immediate access, hence starting with only 5k. She does not used credit card (i taught her well ;0),), she is on her work pension scheme. So yes she is on her way to do well hopefully. i will check the VLS80. I will probably order the book that xylophone recommended as I would not mind learn a few things. She is lucky somehow as she lives rent free for the time being, hence why she can save so much

xylophone

like anyone else, she is going to want to get on the property ladder at some stage. 

The she should consider the LISA.

https://www.moneysavingexpert.com/savings/lifetime-isas/

bostonerimus

jeannot18 said:

bostonerimus said:

Having money in the bank is a good thing. So I would advise your daughter to keep 6 months spending in the bank; pay off any high interest debt like credit cards; contribute to a workplace pension if she has one and when all that is done open a stocks and shares ISA or maybe a LISA - a simple and inexpensive way to go would be with Vanguard and hold something like VLS80 in it. Two other things to do are to do a budget so she can see where to save more money and to educate herself so she knows why she is buying VLS80 and what to expect.

 I will probably order the book that xylophone recommended as I would not mind learn a few things. She is lucky somehow as she lives rent free for the time being, hence why she can save so much

You and your daughter should both educate yourselves about investing before doing anything. One of the first rules is never to buy anything you don't understand. Everything in your portfolio should have a purpose, so savings in the bank for emergencies ie to pay for that new boiler or to help with expenses if you get the sack, the pension is for retirement and you must understand how that is invested or know the details of you plan if it is a final salary pension and the something like an ISA which is a tax advantaged way of investing money that you can access before you retire.

badger09

jeannot18 said:

bostonerimus said:

Having money in the bank is a good thing. So I would advise your daughter to keep 6 months spending in the bank; pay off any high interest debt like credit cards; contribute to a workplace pension if she has one and when all that is done open a stocks and shares ISA or maybe a LISA - a simple and inexpensive way to go would be with Vanguard and hold something like VLS80 in it. Two other things to do are to do a budget so she can see where to save more money and to educate herself so she knows why she is buying VLS80 and what to expect.

Thank you bostonerimus, she has ~7K but wants to keep some for immediate access, hence starting with only 5k. She does not used credit card (i taught her well ;0),), she is on her work pension scheme. So yes she is on her way to do well hopefully. i will check the VLS80. I will probably order the book that xylophone recommended as I would not mind learn a few things. She is lucky somehow as she lives rent free for the time being, hence why she can save so much

Sorry, but if you've taught her not to use her credit card at all, I don't think you have taught her well.
Using a credit card responsibly to pay for things she buys anyway, and paying off the balance in full every month, is a good thing. It shows potential mortgage lenders and other service providers that she can manage her finances sensibly.