18year old £10k investment??

bennb229

Hi all My daughter turned 18 yesterday and with her trust fund and money for family she got £10k, but what should we do with the money? ISA, Savings, premium bonds. Etc. 

What would you do???

barnstar2077

It depends, when will she need access to the money?

bennb229

Not for a min of 12 months maybe two years, if the deal is good enough then would consider three years 

Alexland

How will it eventually be used eg to buy a property?

Albermarle

Here is a comparison table for all types of savings accounts.
Moneyfacts.co.uk | Compare Savings, ISAs, Mortgages & More
It is very unlikely she will need a cash ISA , as she can earn up to £1000 in interest tax free anyway .
For comparison premium bonds pay around 0.8%/0.9% on average .
She could also look at a Lifetime ISA for some of it. It will get a 25% top up from the government with the proviso it is used towards a first time house purchase in future.

bennb229

Alexland said:

How will it eventually be used eg to buy a property?

I’m not sure on this I know if she doesn’t there is a 25% charge 

Alexland

bennb229 said:

I’m not sure on this I know if she doesn’t there is a 25% charge 

The LISA has an effective a 6.25% penalty if withdrawn before 60 for anything other than a qualifying property purchase as she would receive the 25% bonus even if the withdrawal penalty is applied.

For example if she contributed £4000, a £1000 bonus (25%) would be added a month or two later and the withdrawal penalty (from next tax year onwards) would be £1250 (25%) so a reduction of £250 on the original contribution with similar on any interest earned.

So it comes down to if she wants to risk a 6.25% penalty for the possibility of using a 25% bonus against a qualifying property purchase (up to £450k) or using the money from age 60.

sevenhills

bennb229 said:

Hi all My daughter turned 18 yesterday and with her trust fund and money for family she got £10k, but what should we do with the money? ISA, Savings, premium bonds. Etc. 

What would you do???

What should WE do with it? It is your daughters money, not yours.

Maybe spend £2,000 and invest some in shares, unit trusts or premium bonds? Teach her to drive?

barnstar2077

Personally I would encourage her to use the money for an eventual house deposit.

maxsteam

When my daughter was about that age I bought her a £700 car and paid for the insurance. Her mum paid for the driving lessons. She asked me to show her how to make money from stock markets (I think she was expecting a 10 minute answer) so I helped her to open an account with Degiro, put £200 in and choose a couple of stocks for her.

The worst thing that you could do, in my opinion and from my experience as a father, is to give her all the money at once to do with as she pleases. By all means give her some cash but you need to see what she does with it before giving her more. As I am sure you know, 18 year olds believe that they know it all already.