My 16 year old just won £100,000 on Premium Bonds, what to do?

Technotrix

So my daughter had the shock of her life yesterday when she had a letter confirming she'd won £100,000!

Obviously we're delighted for her and want to help her save/ invest it wisely for her future, after a little shopping spree of course. 

A lot of savings accounts, ISAs etc including Lifetime ISAs aren't available to under 18s.  We'll probably start a pension for her and a Lifetime ISA in 2 years time but looking for advice and ideas on how best to safely lock the bulk away (in her name) until she's mature enough to manage it herself. 

fatbelly

Some ideas here

https://www.moneysavingexpert.com/savings/child-savings-tax-free/

And here

https://www.moneysavingexpert.com/savings/junior-isa/

Hope she's sensible. If she is, that is going to be a huge help to her in a few years

Albermarle

Apart from where to put it, you will have to put a lot of effort in to teach here how to handle money responsibly.
Hopefully she is the level headed sort ( for a 16 year old anyway) .
Probably best she does not broadcast the win too widely.

Section62

Albermarle said:

Apart from where to put it, you will have to put a lot of effort in to teach here how to handle money responsibly.
Hopefully she is the level headed sort ( for a 16 year old anyway) .
Probably best she does not broadcast the win too widely.

Agree 100% - too many bad people out there, also difficult to have genuine friendships at that age if they know you can buy them 'stuff' all the time.

Kim_13

She might consider topping her holding up to the maximum £50,000 - this isn’t locked away, but it takes a few days to get at so is more out of the way than it would be if it was held in a savings account attached to her bank account. Only £85,000 per financial institution is protected by the FSCS too, so having it all in one place wouldn’t be a good idea. All winnings are tax free as you probably know already and she could treat any further winnings as spending money while protecting the capital.

A Junior ISA is the obvious place to start but is only locked away until she is 18, if I remember the limits correctly she can put in £9,000 now and another £9,000 from 6th April - again, tax free.

The only accounts that are locked are fixed rate accounts with no right to early closure, locked for the period selected. Some providers will accept 16 year olds, e.g. Skipton Building Society.

This website may be useful: https://moneyfactscompare.co.uk/savings-accounts/

Alistair31

Grats to her.

How much did she have in bonds? 

kempiejon

Technotrix said:

So my daughter had the shock of her life yesterday when she had a letter confirming she'd won £100,000!
advice and ideas on how best to safely lock the bulk away (in her name) until she's mature enough to manage it herself. 

Does she have a full copliments of PBs? £50k would bring a a small windfall most months.
Who can get a Junior ISA Your child must be both: under 18 and living in the UK.
https://www.gov.uk/junior-individual-savings-accounts
SIPP?  Put up to £2,880 a year into the Junior SIPP, and the Government will add tax relief at 20% to make this up to £3,600.

mebu60

Fantastic news. As others, interested to know what size holding and how long held. 

Definitely look at topping up holding to £50k maximum (assuming it's not that already).

I would prioritise JISA and keeping money accessible for uni / accommodation / driving lessons / car (and insurance) etc over pension at this age. 

Keep_pedalling

Please remember this is her money, so I don’t think she should be making irreversible decisions like locking money away for 40+ years in a pension until she has a full understanding of what she is doing.  

Kim_13

Keep_pedalling said:

Please remember this is her money, so I don’t think she should be making irreversible decisions like locking money away for 40+ years in a pension until she has a full understanding of what she is doing.  

Also important when the LISA becomes an option - with the property limit not increasing since LISAs were launched, someone opening an account at 18 could end up having to pay a penalty to access their own money or waiting until 60 to access penalty free, as more years of house prices going up make it more likely that she won’t be able to buy the property she wants for £450,000. More likely in some areas than others, but it’s a risk that isn’t getting any smaller.

Opening with £1 on or shortly after her 18th birthday is a no brainer to start the 1 year clock ticking (before it can be used on a qualifying house purchase) - it costs her about 6p if she ultimately decides the account is not for her and closes it.

Technotrix

Albermarle said:

Apart from where to put it, you will have to put a lot of effort in to teach here how to handle money responsibly.
Hopefully she is the level headed sort ( for a 16 year old anyway) .
Probably best she does not broadcast the win too widely.

Thanks. Yes we've agreed not to tell anyone outside immediate family, she's telling her friends she won £1,000 so she can be excited without it affecting how they see her. 

She's pretty sensible but very impulsive so she wants us to help her come up with a plan to make it work for her without easy access.