Investments for 16 year old

sjp999

boyintheorangeboots said:

xylophone said:

It seems that you have more than £10,000 to save.

The maximum subscription to a CTF is £9000 per CTF year which runs birthday to birthday.

The maximum subscription to a JISA is £9000 per tax year.

You can subscribe the maximum £9000 to the CTF in the CTF year, transfer the CTF to JISA and then subscribe the remaining £1000 (and indeed up to another £8000) to the JISA in the current tax year.

Thank you. What benefit does putting £8.5k (-£420 is already in there) into his CTF first and then a JISA? And how long would it need to stay in his CFT before transferring to a JISA? 

That's the double bubble bit - 2 years worth of deposit value in the time it takes to get from the CTF (bubble 1) to the JISA (bubble 2)

I believe once bubble 1 is in there you can can get Coventry to initiate the transfer. 

xylophone

£8.5k (-£420 is already in there) 

It is irrelevant that the £420 is already in there if it was contributed in a previous CTF year.

The subscription to a CTF/JISA is on an annual basis, just as in an adult ISA.

This, suppose you had subscribed £20,000 to your ISA in the tax year 2020/21 - you could contribute another £20,000 in the tax year 2021/22.

xylophone

And how long would it need to stay in his CFT before transferring to a JISA? 

As soon as you knew it was in the CTF you could take steps to ask your chosen new provider to arrange the transfer to JISA.

xylophone

Does he then open a normal ISA to transfer the money into once he's 18? How easy is it to take out funds from an ISA if he needs the money for anything in the short term?

https://www.coventrybuildingsociety.co.uk/member/help/savings/isas/junior-isas.html#:~:text=At the Coventry, we only,money if they want to.

When the young person reaches 18, their Junior Cash ISA is converted to a Matured Junior ISA (an adult cash ISA) and then they'll be able to access their money if they want to. We’ll need to see some ID from them first.

boyintheorangeboots

Thank you. I know I am missing the point but why put it into the CTF in the first place? 

xylophone

Thank you. I know I am missing the point but why put it into the CTF in the first place? 

https://forums.moneysavingexpert.com/discussion/comment/73329759/#Comment_73329759

Does above help?

The allowance referred to in the above was that for previous years.

The CTF/JISA allowance is now £9000 per annum.

Grumpy_chap

boyintheorangeboots said:

Good morning

My question is two fold if I may:

Firstly, we have been saving some of our 16 year old son's child benefit which now amounts to £10k. It's currently in his Halifax account doing nothing and will stop in September. The account is his name but we are trustees as it was set up years ago. Where is best place to put this please? 

We are thinking some instant access for a car and associated expenses which will be realistically be early next year. Perhaps put into Premium Bonds?

The rest we have no idea about. Some would be good in something long term which can grow. He has also expressed an interest to travel at some point in the future.

The other question is, he is doing an apprenticeship which pays £800 p/m less NI contributions at the moment so a regular savings plan for some of his wages we feel is prudent. Currently the plan is to pay us back for a mountain bike purchase starting September £400 p/m for 6 months, £200 for savings p/m, and the remainder for himself for clothes, going out etc.

We have already discussed this with him and want to get started asap but he (and we) need a better understanding of options.

We are good at saving but need help with the best places to put it.

Any advice will be much appreciated.
Many thanks

If your son is 16 yo and working, then is it not time he took control of his own finances? 

This OP seems to be all about continuing to manage the finances as parents and being directional. 

It might well be time to allow your son to make his own financial decisions and learn prudence through his own choices (including his own mistakes).  He needs to learn the need to budget etc.  As parents, you want to be on hand to guide and support this process, but ultimately his decision (once he has paid that mountain bike).  Your plan has £600 out of £800 every month pre-determined, leaving only £50 per week or less for everything else.

I started my Apprenticeship at 16 and once I received my first pay check, that was mine and my parents had no control or say over what the money went on - they provided support and guidance, but it was all mine to do with as I chose.  You might want to have more influence over the release of the £10k, subject to the rules on that and when the trust account ceases.

Another consideration is he should probably start to pay you some rent / board and lodgings once he starts work as part of learning the cost of living.  He may not like that, but he can move out if he finds a better deal.

Certainly, by 18 he should be on his own two feet financially.  So, you've only a maximum of two years to support his development from "funded / managed" child to independent adult.

boyintheorangeboots

Thank you for your message.

I absolutely agree with the independence. He only started is apprenticeship last month so it's been a steep learning curve for us all. While we suggested the best way of splitting his wages, he specified the amount.

He runs a couple of his own private jobs entirely by himself including how he spends the earnings and has a good grasp of keeping some aside for overheads etc. He's had a couple of weeks of going out more than usual recently and chased for his own work so he can pay for it with that rather than dipping into his wages. I'm hoping this is a positive start to his financial independence and mindset, and something he will build on. I agree he will certainly trip up along the way!

We have already spoken about rent/board which he appreciates will be most definitely be happening....

boyintheorangeboots

Grumpy_chap said:

boyintheorangeboots said:

Good morning

My question is two fold if I may:

Firstly, we have been saving some of our 16 year old son's child benefit which now amounts to £10k. It's currently in his Halifax account doing nothing and will stop in September. The account is his name but we are trustees as it was set up years ago. Where is best place to put this please? 

We are thinking some instant access for a car and associated expenses which will be realistically be early next year. Perhaps put into Premium Bonds?

The rest we have no idea about. Some would be good in something long term which can grow. He has also expressed an interest to travel at some point in the future.

The other question is, he is doing an apprenticeship which pays £800 p/m less NI contributions at the moment so a regular savings plan for some of his wages we feel is prudent. Currently the plan is to pay us back for a mountain bike purchase starting September £400 p/m for 6 months, £200 for savings p/m, and the remainder for himself for clothes, going out etc.

We have already discussed this with him and want to get started asap but he (and we) need a better understanding of options.

We are good at saving but need help with the best places to put it.

Any advice will be much appreciated.
Many thanks

If your son is 16 yo and working, then is it not time he took control of his own finances? 

This OP seems to be all about continuing to manage the finances as parents and being directional. 

It might well be time to allow your son to make his own financial decisions and learn prudence through his own choices (including his own mistakes).  He needs to learn the need to budget etc.  As parents, you want to be on hand to guide and support this process, but ultimately his decision (once he has paid that mountain bike).  Your plan has £600 out of £800 every month pre-determined, leaving only £50 per week or less for everything else.

I started my Apprenticeship at 16 and once I received my first pay check, that was mine and my parents had no control or say over what the money went on - they provided support and guidance, but it was all mine to do with as I chose.  You might want to have more influence over the release of the £10k, subject to the rules on that and when the trust account ceases.

Another consideration is he should probably start to pay you some rent / board and lodgings once he starts work as part of learning the cost of living.  He may not like that, but he can move out if he finds a better deal.

Certainly, by 18 he should be on his own two feet financially.  So, you've only a maximum of two years to support his development from "funded / managed" child to independent adult.

Didn't put your Quote in earlier...

Thank you for your message.

I absolutely agree with the independence. He only started is apprenticeship last month so it's been a steep learning curve for us all. While we suggested the best way of splitting his wages, he specified the amount.

He runs a couple of his own private jobs entirely by himself including how he spends the earnings and has a good grasp of keeping some aside for overheads etc. He's had a couple of weeks of going out more than usual recently and chased for his own work so he can pay for it with that rather than dipping into his wages. I'm hoping this is a positive start to his financial independence and mindset, and something he will build on. I agree he will certainly trip up along the way!

We have already spoken about rent/board which he appreciates will be most definitely be happening....

CharlieMcGill

Would wait till he is 18 and put £4000 per year into a Lifetime ISA, which can be invested. This will restrict how he spends the money to a first home or retirement. But you do get the government contributing 25% to the money added each year. You'll suffer a 5% penalty on your contributions as well as the lost  of the government contributions, if you withdraw the money for any other reason. This is a very good deal as you can leave the money as cash in the LISA with a zero investment risk approach. However way you look at it, youngsters are going to have much greater difficulties in retirement compared to their parents, and the sooner started the better! If retirement is the sole aim then a simple SIPP would be better with a £2880 limit per year if not employed and a 20% government contribution but restricted totally to retirement only post age 57+. 10K over 40 years would have yielded 100K to 200K with low risk passive investments in the past although no certainly regarding the future. Seriously, youngsters are in for a very rough retirement.