What to do with daughters money?

chubsta

Albermarle said:

chubsta said:

flipper_72 said:

chubsta said:

I have an idea what to do after absolutely minimal research but just putting it out there for advice on the best way to go.

Daughter - 20, working full time, just above minimum wage but potential in the future for increases as she gets trained up. Lives at home, no debt at all, currently saves a few bits and pieces but nothing much.
Daughter has just been given £28500 by grandparents for future house deposit.

My idea:
As the money is for a house deposit and will 100% not be used for anything else my limited research shows a LISA may be the way to go so would the following be a good idea...?

Year one - £4000 to the LISA (I believe the Gov will add 25% to this as long as the money is used for a house purchase - anyone confirm?), £16000 to an ordinary ISA, £8000 in the best one year savings account we can find.
Year 2 - another £4000 to the LISA (from the savings account), put the £16000 from the ordinary ISA into another one, leaving £4000 for a Savings account.
Year 3 - yet another $4000 to the LISA (from the Savings account), once again put the £16,000 into a normal ISA, no money left for a savings account.
Year 4 - another £4000 to the LISA, this time money comes from the 'normal' ISA, then put the remaining £12000 in an ISA.

etc etc etc until finally a time when 2-bedroom terraced houses don't cost £350,000 and she can afford to move out!

Obviously she should be able to at some point start contributing to the LISA/ISA from her wages but thought I would keep it simple.

So, does this seem like a good idea? I only started looking at it yesterday afternoon and have zero knowledge on ISAs etc so rather than go too far in thought I would put it out there for helpful comments!

In year 2 the £8000 plus interest from the 1 year account can be split £4k into LISA and balance to ISA. There is no need to take the £16 already in the ISA out, this can be transferred to one with a better interest rate if needed but it isn’t new money so doesn’t count towards the limit.

then year 3 onwards just transfer £4k per year into LISA.

So, if I understand it, the £20,000 annual ISA limit on contributions doesn't include previous years if it is just 'reinvested'? So after 3 years she could have £12,000 (+effectively £3000 from the Gov.) and each year potentially put £16000 into an ISA so she could have £48,000 in that as a maximum? I presumed you could only ever have a total of £20,000 in ISAs but as I said, I am only 24hrs into looking at this!

It is possible to build up ISA's to be worth hundreds of thousands of Pounds, as the £20K is only the annual limit for adding new money.
There is a sub forum for ISA's. If you spend some time scrolling through that and reading some of the threads, you should be better informed about ISA rules. ISAs & tax-free savings — MoneySavingExpert Forum

Has your daughter joined her workplace pension scheme?

No she hasn't, will be 21 next year so should be doing it then.

LHW99

chubsta said:

Albermarle said:

chubsta said:

flipper_72 said:

chubsta said:

I have an idea what to do after absolutely minimal research but just putting it out there for advice on the best way to go.

Daughter - 20, working full time, just above minimum wage but potential in the future for increases as she gets trained up. Lives at home, no debt at all, currently saves a few bits and pieces but nothing much.
Daughter has just been given £28500 by grandparents for future house deposit.

My idea:
As the money is for a house deposit and will 100% not be used for anything else my limited research shows a LISA may be the way to go so would the following be a good idea...?

Year one - £4000 to the LISA (I believe the Gov will add 25% to this as long as the money is used for a house purchase - anyone confirm?), £16000 to an ordinary ISA, £8000 in the best one year savings account we can find.
Year 2 - another £4000 to the LISA (from the savings account), put the £16000 from the ordinary ISA into another one, leaving £4000 for a Savings account.
Year 3 - yet another $4000 to the LISA (from the Savings account), once again put the £16,000 into a normal ISA, no money left for a savings account.
Year 4 - another £4000 to the LISA, this time money comes from the 'normal' ISA, then put the remaining £12000 in an ISA.

etc etc etc until finally a time when 2-bedroom terraced houses don't cost £350,000 and she can afford to move out!

Obviously she should be able to at some point start contributing to the LISA/ISA from her wages but thought I would keep it simple.

So, does this seem like a good idea? I only started looking at it yesterday afternoon and have zero knowledge on ISAs etc so rather than go too far in thought I would put it out there for helpful comments!

In year 2 the £8000 plus interest from the 1 year account can be split £4k into LISA and balance to ISA. There is no need to take the £16 already in the ISA out, this can be transferred to one with a better interest rate if needed but it isn’t new money so doesn’t count towards the limit.

then year 3 onwards just transfer £4k per year into LISA.

So, if I understand it, the £20,000 annual ISA limit on contributions doesn't include previous years if it is just 'reinvested'? So after 3 years she could have £12,000 (+effectively £3000 from the Gov.) and each year potentially put £16000 into an ISA so she could have £48,000 in that as a maximum? I presumed you could only ever have a total of £20,000 in ISAs but as I said, I am only 24hrs into looking at this!

It is possible to build up ISA's to be worth hundreds of thousands of Pounds, as the £20K is only the annual limit for adding new money.
There is a sub forum for ISA's. If you spend some time scrolling through that and reading some of the threads, you should be better informed about ISA rules. ISAs & tax-free savings — MoneySavingExpert Forum

Has your daughter joined her workplace pension scheme?

No she hasn't, will be 21 next year so should be doing it then.

Can she not request to join now, even if not autoenrolled?

400ixl

Using a LISA makes absolute sense if she is going to be saving a deposit for a house. Just make sure that it is not likely the house she will be buying in not above the £450k limit it can be used for.

You can then start one in this financial year with £4k, then in April of each year add another £4k. So by April 2025 she could have £10k in the LISA (with 1 year after the first £4k going in being the date the additional £2k could be used).

There is really only any point in cash ISA's is if keeping the rest in high interest accounts means paying additional tax on the remainder. She will get whatever is left from her 0% tax band + £1000 to cover interest so getting into ISA's may not be necessary as she is going to be moving £4k each year to a LISA anyway.

Cash ISA's tend to have worse rates than savings accounts. Especially if you can lock some away into long term savings, some into high rate regular saver accounts and use easy access for short term.

For example she could put £3.6k into an easy access account at maybe 3-4% and use that to feed into a regular saver account at the likes of First Direct and get 7% interest paid at the end of the year, then move that to the LISA.

Fill the bucket from a longer term account that is maturing and repeat.

If she is not intending to buy a house for 10 years or so, then looking at a stocks and shares ISA could be an option, and could out perform drip feeding an LISA, but the risk is higher.

chubsta

400ixl said:

Using a LISA makes absolute sense if she is going to be saving a deposit for a house. Just make sure that it is not likely the house she will be buying in not above the £450k limit it can be used for.

You can then start one in this financial year with £4k, then in April of each year add another £4k. So by April 2025 she could have £10k in the LISA (with 1 year after the first £4k going in being the date the additional £2k could be used).

There is really only any point in cash ISA's is if keeping the rest in high interest accounts means paying additional tax on the remainder. She will get whatever is left from her 0% tax band + £1000 to cover interest so getting into ISA's may not be necessary as she is going to be moving £4k each year to a LISA anyway.

Cash ISA's tend to have worse rates than savings accounts. Especially if you can lock some away into long term savings, some into high rate regular saver accounts and use easy access for short term.

For example she could put £3.6k into an easy access account at maybe 3-4% and use that to feed into a regular saver account at the likes of First Direct and get 7% interest paid at the end of the year, then move that to the LISA.

Fill the bucket from a longer term account that is maturing and repeat.

If she is not intending to buy a house for 10 years or so, then looking at a stocks and shares ISA could be an option, and could out perform drip feeding an LISA, but the risk is higher.

Thanks very much for the detailed reply - everything looks like the LISA is the way to go, regarding the ISA vs Savings bit, I am looking for the very best return naturally so was thinking about whether it is best to just put it in a higher-interest savings account rather than an ISA but the interest on the initial £24000 would be approx £1200 at 5% so we don't want her to pay tax on the interest however small that is. There is an easy access cash isa with Trading212 which looks like it may fit the bill for the £16000 - any thoughts? Would then put £4000 in the LISA and find another savings account for the final £8000 that is available this year, sound idea?

In terms of timing, I know everything is based around the financial year but would there be any issues getting everything in place in the next week or so? And would we then have to move everything around and put another £4000 in the LISA in April 25 or would we need to wait until the 12 month anniversary of putting it in - Im guessing the former?

chubsta

LHW99 said:

chubsta said:

Albermarle said:

chubsta said:

flipper_72 said:

chubsta said:

I have an idea what to do after absolutely minimal research but just putting it out there for advice on the best way to go.

Daughter - 20, working full time, just above minimum wage but potential in the future for increases as she gets trained up. Lives at home, no debt at all, currently saves a few bits and pieces but nothing much.
Daughter has just been given £28500 by grandparents for future house deposit.

My idea:
As the money is for a house deposit and will 100% not be used for anything else my limited research shows a LISA may be the way to go so would the following be a good idea...?

Year one - £4000 to the LISA (I believe the Gov will add 25% to this as long as the money is used for a house purchase - anyone confirm?), £16000 to an ordinary ISA, £8000 in the best one year savings account we can find.
Year 2 - another £4000 to the LISA (from the savings account), put the £16000 from the ordinary ISA into another one, leaving £4000 for a Savings account.
Year 3 - yet another $4000 to the LISA (from the Savings account), once again put the £16,000 into a normal ISA, no money left for a savings account.
Year 4 - another £4000 to the LISA, this time money comes from the 'normal' ISA, then put the remaining £12000 in an ISA.

etc etc etc until finally a time when 2-bedroom terraced houses don't cost £350,000 and she can afford to move out!

Obviously she should be able to at some point start contributing to the LISA/ISA from her wages but thought I would keep it simple.

So, does this seem like a good idea? I only started looking at it yesterday afternoon and have zero knowledge on ISAs etc so rather than go too far in thought I would put it out there for helpful comments!

In year 2 the £8000 plus interest from the 1 year account can be split £4k into LISA and balance to ISA. There is no need to take the £16 already in the ISA out, this can be transferred to one with a better interest rate if needed but it isn’t new money so doesn’t count towards the limit.

then year 3 onwards just transfer £4k per year into LISA.

So, if I understand it, the £20,000 annual ISA limit on contributions doesn't include previous years if it is just 'reinvested'? So after 3 years she could have £12,000 (+effectively £3000 from the Gov.) and each year potentially put £16000 into an ISA so she could have £48,000 in that as a maximum? I presumed you could only ever have a total of £20,000 in ISAs but as I said, I am only 24hrs into looking at this!

It is possible to build up ISA's to be worth hundreds of thousands of Pounds, as the £20K is only the annual limit for adding new money.
There is a sub forum for ISA's. If you spend some time scrolling through that and reading some of the threads, you should be better informed about ISA rules. ISAs & tax-free savings — MoneySavingExpert Forum

Has your daughter joined her workplace pension scheme?

No she hasn't, will be 21 next year so should be doing it then.

Can she not request to join now, even if not autoenrolled?

We talked about this the other day, she is 20 at the moment and we are going to wait until she hits 21 - I know its not a huge amount of money but she has started driving and bought a car (no loan!) so funds are a little tight at the moment. Plus, Im not likely to be alive by the time she retires so she will have plenty of money from inheritances so its not our biggest priority.

400ixl

How much is she earning a year? Tax on interest may not be an issue for her.

wjr4

chubsta said:

400ixl said:

Using a LISA makes absolute sense if she is going to be saving a deposit for a house. Just make sure that it is not likely the house she will be buying in not above the £450k limit it can be used for.

You can then start one in this financial year with £4k, then in April of each year add another £4k. So by April 2025 she could have £10k in the LISA (with 1 year after the first £4k going in being the date the additional £2k could be used).

There is really only any point in cash ISA's is if keeping the rest in high interest accounts means paying additional tax on the remainder. She will get whatever is left from her 0% tax band + £1000 to cover interest so getting into ISA's may not be necessary as she is going to be moving £4k each year to a LISA anyway.

Cash ISA's tend to have worse rates than savings accounts. Especially if you can lock some away into long term savings, some into high rate regular saver accounts and use easy access for short term.

For example she could put £3.6k into an easy access account at maybe 3-4% and use that to feed into a regular saver account at the likes of First Direct and get 7% interest paid at the end of the year, then move that to the LISA.

Fill the bucket from a longer term account that is maturing and repeat.

If she is not intending to buy a house for 10 years or so, then looking at a stocks and shares ISA could be an option, and could out perform drip feeding an LISA, but the risk is higher.

Thanks very much for the detailed reply - everything looks like the LISA is the way to go, regarding the ISA vs Savings bit, I am looking for the very best return naturally so was thinking about whether it is best to just put it in a higher-interest savings account rather than an ISA but the interest on the initial £24000 would be approx £1200 at 5% so we don't want her to pay tax on the interest however small that is. There is an easy access cash isa with Trading212 which looks like it may fit the bill for the £16000 - any thoughts? Would then put £4000 in the LISA and find another savings account for the final £8000 that is available this year, sound idea?

In terms of timing, I know everything is based around the financial year but would there be any issues getting everything in place in the next week or so? And would we then have to move everything around and put another £4000 in the LISA in April 25 or would we need to wait until the 12 month anniversary of putting it in - Im guessing the former?

£4k into cash LISA now, £4k on 6th April 2025. Have you looked into regular savings accounts for a small amount on a monthly basis? 

wjr4

chubsta said:

LHW99 said:

chubsta said:

Albermarle said:

chubsta said:

flipper_72 said:

chubsta said:

I have an idea what to do after absolutely minimal research but just putting it out there for advice on the best way to go.

Daughter - 20, working full time, just above minimum wage but potential in the future for increases as she gets trained up. Lives at home, no debt at all, currently saves a few bits and pieces but nothing much.
Daughter has just been given £28500 by grandparents for future house deposit.

My idea:
As the money is for a house deposit and will 100% not be used for anything else my limited research shows a LISA may be the way to go so would the following be a good idea...?

Year one - £4000 to the LISA (I believe the Gov will add 25% to this as long as the money is used for a house purchase - anyone confirm?), £16000 to an ordinary ISA, £8000 in the best one year savings account we can find.
Year 2 - another £4000 to the LISA (from the savings account), put the £16000 from the ordinary ISA into another one, leaving £4000 for a Savings account.
Year 3 - yet another $4000 to the LISA (from the Savings account), once again put the £16,000 into a normal ISA, no money left for a savings account.
Year 4 - another £4000 to the LISA, this time money comes from the 'normal' ISA, then put the remaining £12000 in an ISA.

etc etc etc until finally a time when 2-bedroom terraced houses don't cost £350,000 and she can afford to move out!

Obviously she should be able to at some point start contributing to the LISA/ISA from her wages but thought I would keep it simple.

So, does this seem like a good idea? I only started looking at it yesterday afternoon and have zero knowledge on ISAs etc so rather than go too far in thought I would put it out there for helpful comments!

In year 2 the £8000 plus interest from the 1 year account can be split £4k into LISA and balance to ISA. There is no need to take the £16 already in the ISA out, this can be transferred to one with a better interest rate if needed but it isn’t new money so doesn’t count towards the limit.

then year 3 onwards just transfer £4k per year into LISA.

So, if I understand it, the £20,000 annual ISA limit on contributions doesn't include previous years if it is just 'reinvested'? So after 3 years she could have £12,000 (+effectively £3000 from the Gov.) and each year potentially put £16000 into an ISA so she could have £48,000 in that as a maximum? I presumed you could only ever have a total of £20,000 in ISAs but as I said, I am only 24hrs into looking at this!

It is possible to build up ISA's to be worth hundreds of thousands of Pounds, as the £20K is only the annual limit for adding new money.
There is a sub forum for ISA's. If you spend some time scrolling through that and reading some of the threads, you should be better informed about ISA rules. ISAs & tax-free savings — MoneySavingExpert Forum

Has your daughter joined her workplace pension scheme?

No she hasn't, will be 21 next year so should be doing it then.

Can she not request to join now, even if not autoenrolled?

We talked about this the other day, she is 20 at the moment and we are going to wait until she hits 21 - I know its not a huge amount of money but she has started driving and bought a car (no loan!) so funds are a little tight at the moment. Plus, Im not likely to be alive by the time she retires so she will have plenty of money from inheritances so it’s not our biggest priority.

I’d make sure she can pay next years insurance as a lump sum rather than monthly, if she pays monthly. Make sure she is getting ready to buy by being on the electoral roll etc. 

chubsta

wjr4 said:

chubsta said:

LHW99 said:

chubsta said:

Albermarle said:

chubsta said:

flipper_72 said:

chubsta said:

I have an idea what to do after absolutely minimal research but just putting it out there for advice on the best way to go.

Daughter - 20, working full time, just above minimum wage but potential in the future for increases as she gets trained up. Lives at home, no debt at all, currently saves a few bits and pieces but nothing much.
Daughter has just been given £28500 by grandparents for future house deposit.

My idea:
As the money is for a house deposit and will 100% not be used for anything else my limited research shows a LISA may be the way to go so would the following be a good idea...?

Year one - £4000 to the LISA (I believe the Gov will add 25% to this as long as the money is used for a house purchase - anyone confirm?), £16000 to an ordinary ISA, £8000 in the best one year savings account we can find.
Year 2 - another £4000 to the LISA (from the savings account), put the £16000 from the ordinary ISA into another one, leaving £4000 for a Savings account.
Year 3 - yet another $4000 to the LISA (from the Savings account), once again put the £16,000 into a normal ISA, no money left for a savings account.
Year 4 - another £4000 to the LISA, this time money comes from the 'normal' ISA, then put the remaining £12000 in an ISA.

etc etc etc until finally a time when 2-bedroom terraced houses don't cost £350,000 and she can afford to move out!

Obviously she should be able to at some point start contributing to the LISA/ISA from her wages but thought I would keep it simple.

So, does this seem like a good idea? I only started looking at it yesterday afternoon and have zero knowledge on ISAs etc so rather than go too far in thought I would put it out there for helpful comments!

In year 2 the £8000 plus interest from the 1 year account can be split £4k into LISA and balance to ISA. There is no need to take the £16 already in the ISA out, this can be transferred to one with a better interest rate if needed but it isn’t new money so doesn’t count towards the limit.

then year 3 onwards just transfer £4k per year into LISA.

So, if I understand it, the £20,000 annual ISA limit on contributions doesn't include previous years if it is just 'reinvested'? So after 3 years she could have £12,000 (+effectively £3000 from the Gov.) and each year potentially put £16000 into an ISA so she could have £48,000 in that as a maximum? I presumed you could only ever have a total of £20,000 in ISAs but as I said, I am only 24hrs into looking at this!

It is possible to build up ISA's to be worth hundreds of thousands of Pounds, as the £20K is only the annual limit for adding new money.
There is a sub forum for ISA's. If you spend some time scrolling through that and reading some of the threads, you should be better informed about ISA rules. ISAs & tax-free savings — MoneySavingExpert Forum

Has your daughter joined her workplace pension scheme?

No she hasn't, will be 21 next year so should be doing it then.

Can she not request to join now, even if not autoenrolled?

We talked about this the other day, she is 20 at the moment and we are going to wait until she hits 21 - I know its not a huge amount of money but she has started driving and bought a car (no loan!) so funds are a little tight at the moment. Plus, Im not likely to be alive by the time she retires so she will have plenty of money from inheritances so it’s not our biggest priority.

I’d make sure she can pay next years insurance as a lump sum rather than monthly, if she pays monthly. Make sure she is getting ready to buy by being on the electoral roll etc. 

Yes, currently paying monthly but the first year is up in December so we are hoping for a major drop in insurance costs which will allow her to pay it in one go, and she is on the electoral roll. Realistically there won't be a house purchase for a few years at least, housing around here is incredibly expensive - you are looking at £350,000 for a small terraced - so not sure it will ever be affordable but you can only do as much as you can...

wjr4

chubsta said:

wjr4 said:

chubsta said:

LHW99 said:

chubsta said:

Albermarle said:

chubsta said:

flipper_72 said:

chubsta said:

I have an idea what to do after absolutely minimal research but just putting it out there for advice on the best way to go.

Daughter - 20, working full time, just above minimum wage but potential in the future for increases as she gets trained up. Lives at home, no debt at all, currently saves a few bits and pieces but nothing much.
Daughter has just been given £28500 by grandparents for future house deposit.

My idea:
As the money is for a house deposit and will 100% not be used for anything else my limited research shows a LISA may be the way to go so would the following be a good idea...?

Year one - £4000 to the LISA (I believe the Gov will add 25% to this as long as the money is used for a house purchase - anyone confirm?), £16000 to an ordinary ISA, £8000 in the best one year savings account we can find.
Year 2 - another £4000 to the LISA (from the savings account), put the £16000 from the ordinary ISA into another one, leaving £4000 for a Savings account.
Year 3 - yet another $4000 to the LISA (from the Savings account), once again put the £16,000 into a normal ISA, no money left for a savings account.
Year 4 - another £4000 to the LISA, this time money comes from the 'normal' ISA, then put the remaining £12000 in an ISA.

etc etc etc until finally a time when 2-bedroom terraced houses don't cost £350,000 and she can afford to move out!

Obviously she should be able to at some point start contributing to the LISA/ISA from her wages but thought I would keep it simple.

So, does this seem like a good idea? I only started looking at it yesterday afternoon and have zero knowledge on ISAs etc so rather than go too far in thought I would put it out there for helpful comments!

In year 2 the £8000 plus interest from the 1 year account can be split £4k into LISA and balance to ISA. There is no need to take the £16 already in the ISA out, this can be transferred to one with a better interest rate if needed but it isn’t new money so doesn’t count towards the limit.

then year 3 onwards just transfer £4k per year into LISA.

So, if I understand it, the £20,000 annual ISA limit on contributions doesn't include previous years if it is just 'reinvested'? So after 3 years she could have £12,000 (+effectively £3000 from the Gov.) and each year potentially put £16000 into an ISA so she could have £48,000 in that as a maximum? I presumed you could only ever have a total of £20,000 in ISAs but as I said, I am only 24hrs into looking at this!

It is possible to build up ISA's to be worth hundreds of thousands of Pounds, as the £20K is only the annual limit for adding new money.
There is a sub forum for ISA's. If you spend some time scrolling through that and reading some of the threads, you should be better informed about ISA rules. ISAs & tax-free savings — MoneySavingExpert Forum

Has your daughter joined her workplace pension scheme?

No she hasn't, will be 21 next year so should be doing it then.

Can she not request to join now, even if not autoenrolled?

We talked about this the other day, she is 20 at the moment and we are going to wait until she hits 21 - I know its not a huge amount of money but she has started driving and bought a car (no loan!) so funds are a little tight at the moment. Plus, Im not likely to be alive by the time she retires so she will have plenty of money from inheritances so it’s not our biggest priority.

I’d make sure she can pay next years insurance as a lump sum rather than monthly, if she pays monthly. Make sure she is getting ready to buy by being on the electoral roll etc. 

Yes, currently paying monthly but the first year is up in December so we are hoping for a major drop in insurance costs which will allow her to pay it in one go, and she is on the electoral roll. Realistically there won't be a house purchase for a few years at least, housing around here is incredibly expensive - you are looking at £350,000 for a small terraced - so not sure it will ever be affordable but you can only do as much as you can...

Has she looked into shared ownership? Lots people I know do that to get on to the property ladder. People only seem to moan about the negatives but there’s a lot of positives too.