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

thegreenone

nottsphil said:

I can't believe that nobody has suggested that the first priority is to get on the property ladder. They could be receiving rent until they are ready to move in themselves, hopefully before any right to rent-for-life act is passed.

Can a 16 year old buy a property?

saajan_12

Some of the more involved investment may not be the best idea immediately - its a lot for a 16yr old to track and be responsible for even over the next couple of years. I wouldn't be thinking about property or drip feeding regular savers yet. 

Certainly think about when she could most benefit from access to the money eg for a house deposit and structure it in that way. But I'd keep it simple with a high interest account and later investing in an index tracker. Those can be within an ISA / Pension / general taxable account depending on the allowances and when want the access. But the maintenance and concept has to be understandable. 

Albermarle

saajan_12 said:

Some of the more involved investment may not be the best idea immediately - its a lot for a 16yr old to track and be responsible for even over the next couple of years. I wouldn't be thinking about property or drip feeding regular savers yet. 

Certainly think about when she could most benefit from access to the money eg for a house deposit and structure it in that way. But I'd keep it simple with a high interest account and later investing in an index tracker. Those can be within an ISA / Pension / general taxable account depending on the allowances and when want the access. But the maintenance and concept has to be understandable. 

Not sure a 16 or even 18 year old would be that impressed if parents invested in an index tracker and it fell 40%......

london21

Congrayulations to your daughter. Some hope as i started this month. 

I will suggest Junior ISAs (JISAs) then when 18 and above ISA index fund investment rather than LISA or pension.

higher rate interest rate account. 

pension too young and long term better to make an informed decision herself.

Section62

waveneygnome said:

(I would be worrried about the effect on siblings - we have saved into PB's for our teenage children, and there is an unwritten rule that if any of them win BIG.....its has to be shared)

 

When does the rule expire?

At ages (say) 15 & 16 'A' wins £10k and gives 'B' £5k.  At ages 35 & 36 'B' wins £100k... is 'B' going to give 'A' £50k?

How would you enforce the rule if the winner decides not to share?

ZeroSum

thegreenone said:

nottsphil said:

I can't believe that nobody has suggested that the first priority is to get on the property ladder. They could be receiving rent until they are ready to move in themselves, hopefully before any right to rent-for-life act is passed.

Can a 16 year old buy a property?

Probably could but likeky wouldn't be able to get a mortgage 

ZeroSum

nottsphil said:

I can't believe that nobody has suggested that the first priority is to get on the property ladder. They could be receiving rent until they are ready to move in themselves, hopefully before any right to rent-for-life act is passed.

Lots of people have just not as an investor.
Using it as a deposit once they've left education & gained meaningful employment.

Can you get a BTL mortgage at 16 when you've got no income coming in,

daveyjp

thegreenone said:

nottsphil said:

I can't believe that nobody has suggested that the first priority is to get on the property ladder. They could be receiving rent until they are ready to move in themselves, hopefully before any right to rent-for-life act is passed.

Can a 16 year old buy a property?

They can buy and own property, but it has to be done so in trust until they are 18.

eskbanker

london21 said:

Congrayulations to your daughter. Some hope as i started this month. 

I will suggest Junior ISAs (JISAs) then when 18 and above ISA index fund investment rather than LISA or pension.

higher rate interest rate account. 

pension too young and long term better to make an informed decision herself.

It's not a simple case of either/or, so a balanced approach is likely to be beneficial, i.e. making use of savings products and investments, either standalone and/or within the pension wrapper, and a LISA is a complete no-brainer for someone who's likely to be wanting to get onto the property ladder in early adulthood, unless they have expensive tastes that would rule out properties below £450K....

Roger175

Angelica123 said:

Roger175 said:

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.

True. But they are also in high pressure jobs that are associated with burnout. They can access SIPP certainly before teacher or doctor pension - it may give them the flexibility to cut down hours or retire earlier. It's a longer term benefit but still invaluable. After all they may retire before they get their inheritances given how life expectancy keeps increasing. 

I think the best financial planning involves both safeguarding the future and maximising the present. It doesn't need to be either/or. I personally think splitting the money between pension, medium goals such as house deposits and then some fun money (eg travelling in your 20s in such a different experience to travelling when you are older). 

Don't get me wrong, I'm all for pensions, but when we were trying to help them out with their house deposits, it was annoying to think of the money tied up in the pension, which would have been so much more help in getting them on the housing ladder. Luckily, all of them now have both, so best of both worlds. I just wish someone had cautioned me against it at the time.