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

Technotrix

Alistair31 said:

Grats to her.

How much did she have in bonds? 

She had £10,250. The winning bond was purchased in 2023 with money gifted by my Dad after my brother died leaving a small pension. It was his birthday yesterday when the letter arrived, made a tough day extra special. 

Technotrix

kempiejon said:

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.
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.

We're topping up to the max PB while we work out what to do. Yes she has a small JISA so we'll stick £9k straight in there when it lands and again in April.

Both her Dad and I regret not paying more attention to pensions when young so I think a SIPP is a good idea. Even with a couple of years' contributions it would be a good start and encourage her to save into it once she's working. 

lr1277

Have the money mule conversation with her. Make sure she know not what to do.

poseidon1

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.  

No fear of that. Presumably with no meaningful earned income she can only invest £2880 annually at the moment.

jaypers

That’s amazing, congratulations to your daughter. 

Things as a parent I would work through with her.

A lot of talk about money management in the context of £100k etc.

Get a Lifetime ISA going for her, if she doesn’t have one already.
Max out ISA allowance for 2024/25 and same for 2025/26. Look at Funds in an Investment ISA.
2 or 3 Easy Access accounts…..like others have said, locking away needs thought.
Perhaps earmark £75k as saved/invested ring fenced and £25k in a separate pot for maybe a car, holiday, enjoyment etc.

Is she going to Uni? Would still get all of the loans she possibly can towards it……don’t blow the winnings (IMHO)!

eskbanker

jaypers said:

Get a Lifetime ISA going for her, if she doesn’t have one already.

Max out ISA allowance for 2024/25 and same for 2025/26. Look at Funds in an Investment ISA.

From OP (in the context of the lucky daughter only being 16):

Technotrix said:

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

aroominyork

Anyone thinking of starting a Lifetime ISA might want to wait and see what comes out of the select committee's review https://committees.parliament.uk/committee/158/treasury-committee/news/204592/is-the-lifetime-isa-fit-for-purpose-in-2025-committee-calls-for-evidence/

ian1246

Top up to £50k PB

I don't know if I'd open a pension in your shoes - compounding is absolutely the 9th wonder of the world, the thing is... she's going to be 61 or 62 years old at the absolute earliest when she'd be able to access that money (state pension 71 or 72 years, legislation being proposed to make the earliest you can access a pension being 10 years before state pension).

That moneys going to be immeasurably more beneficial to her between now & then. Maxing out her LISA is definitely a no brainer *provided she has aspirations to one day own a house & is looking at employment which will realistically allow her a good income for a decent mortgage* 

Otherwise your again locking that money away until she's lived the majority of her life!

£50K in PB, Youth ISA's and a combination of as high paying interest accounts as you can find with regular savers being drip fed.

Basically if she can leverage this to one day, when she's ready, to get straight onto the housing ladder then it'll be hugely beneficial - unlike most of her peers, she'll potentially be able to skip the "10+years in rentals whilst desperately saving a deposit" stage.

That means additional years/decades of property value growth (option of downsizing for retirement) & additional years to either put the mortgage over (reduced monthly payments- more disposable income in the here & now) or just getting rid of the mortgage earlier on in her life (or allowing increased options to upsize with a remortgage).

Either way - potentially significantly reduced housing costs for her working life with all the implications that could mean. I.e. in 20 years if she's looking to become a mum, less pressure to have to return to work after maternity etc... or any other combination of literally priceless benefits/opportunities which having reduced living costs can bring.

Compared to that... a pension in 50+years time is fairly trivial!

Roger175

I would also caution against the pension for someone this young for many of the same reasons stated above.

Back in the 00's when everything seemed very rosy, we started pensions for out 3 boys, they were still school kids back then and it seemed like a good idea at the time, but as they've grown up and developed careers, it has become fairly obvious that they will be sorting out their own pensions (all in good jobs, one a doctor, one a teacher and one an engineer), furthermore, unless we've totally miscalculated, they stand to inherit a substantial sum each from us and other relatives. The money now sitting in those SIPP pensions which we started for them, would have been far more useful as a house deposit. OK, they've managed and have all got on the housing ladder, but that extra money would have been be so much more useful put towards the housing deposit.

HSC_2

Join the "Premium Bonds (Unofficial)" Facebook group and ask the question there as the advisor NS&I used to advise jackpot winners is in that group and will be used to advising child winners.