Investment advice for high earning teenager

NottinghamKnight

The big thing to check on is insurance this may well be part of his contract. My partner worked with a woman in Scotland whose son signed for a professional football club, injury ended his career within a year or two but he got a high six or possibly low seven figure payout under his insurance cover. 

ChilliBob

I wpuod definitely speak to an advisor regarding tax, there may be some good advice there, perhaps investing in some of the things like Vcts or eis to a small degree to essentially reduce income tax. These are risky investments though. Hence the small part of a portfolio. 
Someone suggested an offshore bond structure to me recently, however, I don't fully understand it so I'm quite sceptical of it until I learn more. But I hadn't heard of it until I spoke to someone who looks at tax, so yeah, they may well offer some interesting and valuable advise 

jimpwarsop

Tell him to read about Robbie Fowler.

Shankers

jimpwarsop said:

Tell him to read about Robbie Fowler.

This. He's become a very successful property developer!

Shankers

Congratulations to your son! It takes considerable hard work and talent to get where he's got to. 
Here are some ideas. I don't know whether there are other options uniquely available to sports professionals, but if I were in this position here's how I'd be thinking. 
I reckon ring-fence a certain nett amount of earnings each month for spending which is reasonable but also enjoyable so he doesn't feel resentful that he can't enjoy his earnings.
Short-term: he'll want his own place at some point, so a LISA is still a tax-efficient option here.
Medium-term: a stocks and shares ISA with a global tracker would help here, with some money into premium bonds which will also be tax efficient. Of course think about a pension
Long-term: overpayments on any house he buys and also saving into a pension.

MaxiRobriguez

Apodemus said:

Arguably, avoiding life-style inflation and the impulse to live the high-rolling lifestyle will do much more for his long-term financial security than the choice of investments.  You can't put old heads on young shoulders, but I wonder if there isn't a network of older, respected professionals who can talk to the youngsters about the financial side of their careers?  

Agree with this. He's entering an industry which is chocked full of egotistical show-offs. The hardest thing will be convincing him that even though he's got a very good starting contract, he's not guaranteed a career in the sport yet, and therefore using a good chunk of the 6 figure salary now to invest will mean if he does unfortunately not secure a follow up contract, then he doesn't have to slog his guts out in a more menial job until he's 65 like other kids his age. He doesn't have to invest stupid amounts like 70% or 80%, just getting £25k for the next five years into investments would be a great start and still leaves tonnes more more to "enjoy life".

Trying to get an old head on young shoulders like this may also focus him on continual development of his football and not think "he's made it" already - such hubris has led many good young footballers to leave the profession in their early 20's. As someone like your son who was on that pathway before having to give it up because of perpetual knee issues, I saw teammates who should have gone onto have a full career end up plying their trade in Australia for pretty average salaries because they thought they'd make it. If he does make the grade into his 20's and secures another contract then he's laughing - he'll have built up that nest egg already and can enjoy the proceeds of his hard work.

Final tip - if he does make the grade, convince him to join Forest?

DiggerUK

Genevieve29 said:.........We will have access to lawyers, specialist financial advisors, accountants etc. but I'm aware that having money can attract people who would like to relieve you of some of it. I'm happy to pay for good advice but I want to be as well informed as I can be.

How wise. The people I've highlighted  will present themselves to you as only having your sons best interests at heart of course. They will also be so very, very, very nice and polite, which I would put down to them having very deep, empty, pockets with powerful money sucking vacuums in them.

Anyway, putting my cynicism to one side, and as you have realised, you do need to plan. Look in to it, you may find it is not as daunting as you imagine, but you could help him manage his own affairs.
Maxing out all pots for now that you have already investigated won't do any harm. More importantly it will give you some time to check out if DIY is what you want. I think the best plan for now is to get used to this change, keep calm and plan on.

One item that will immediately hoover up a lot of money is a house purchase and of course he now needs a bling bling car. The house will be a good long term investment, the car....well he deserves it.
Best of fortune, hope for the best, plan for the worst..._ 

Genevieve29

Final tip - if he does make the grade, convince him to join Forest?

Actually, Forest were interested when he was a youngster, but a bit too far from home :-)

Genevieve29

DiggerUK said:

Genevieve29 said:.........We will have access to lawyers, specialist financial advisors, accountants etc. but I'm aware that having money can attract people who would like to relieve you of some of it. I'm happy to pay for good advice but I want to be as well informed as I can be.

How wise. The people I've highlighted  will present themselves to you as only having your sons best interests at heart of course. They will also be so very, very, very nice and polite, which I would put down to them having very deep, empty, pockets with powerful money sucking vacuums in them.

Anyway, putting my cynicism to one side, and as you have realised, you do need to plan. Look in to it, you may find it is not as daunting as you imagine, but you could help him manage his own affairs.
Maxing out all pots for now that you have already investigated won't do any harm. More importantly it will give you some time to check out if DIY is what you want. I think the best plan for now is to get used to this change, keep calm and plan on.

One item that will immediately hoover up a lot of money is a house purchase and of course he now needs a bling bling car. The house will be a good long term investment, the car....well he deserves it.
Best of fortune, hope for the best, plan for the worst..._ 

Yes, having done a bit of research and getting feedback on here, I'm feeling a bit less daunted already.

The bling bling car will have to wait a short while, he's not quite old enough to learn to drive yet. But I know it's on the horizon. Likewise the house/apartment is a little way off too.

I was actually thinking last night that 'hope for the best, plan for the worst' would be the right approach.

Genevieve29

MaxiRobriguez said:

Apodemus said:

Arguably, avoiding life-style inflation and the impulse to live the high-rolling lifestyle will do much more for his long-term financial security than the choice of investments.  You can't put old heads on young shoulders, but I wonder if there isn't a network of older, respected professionals who can talk to the youngsters about the financial side of their careers?  

Agree with this. He's entering an industry which is chocked full of egotistical show-offs. The hardest thing will be convincing him that even though he's got a very good starting contract, he's not guaranteed a career in the sport yet, and therefore using a good chunk of the 6 figure salary now to invest will mean if he does unfortunately not secure a follow up contract, then he doesn't have to slog his guts out in a more menial job until he's 65 like other kids his age. He doesn't have to invest stupid amounts like 70% or 80%, just getting £25k for the next five years into investments would be a great start and still leaves tonnes more more to "enjoy life".

Trying to get an old head on young shoulders like this may also focus him on continual development of his football and not think "he's made it" already - such hubris has led many good young footballers to leave the profession in their early 20's. As someone like your son who was on that pathway before having to give it up because of perpetual knee issues, I saw teammates who should have gone onto have a full career end up plying their trade in Australia for pretty average salaries because they thought they'd make it. If he does make the grade into his 20's and secures another contract then he's laughing - he'll have built up that nest egg already and can enjoy the proceeds of his hard work.

Final tip - if he does make the grade, convince him to join Forest?

This totally resonates with me.

I want him to secure his financial future with the money he earns in the next 2-5 years even if he doesn't go on to have a high earning career. And to learn good habits now that will stand him in good stead if he does.

Also, keeping him grounded. He's already seen lads slightly older take their foot off the pedal and fade away a bit because they thought they'd made it at 18 so he is at least aware that happens.

Thanks for your insights.