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

Technotrix

jimjames said:

Roger175 said:

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

For £2880 out of £100k I really can't see a reason to not do a pension. With 40 years compounding it will be a very effective use of a small part.

That's what I'm thinking. She could invest some of the interest until she's working and not touch the capital.

Both I and her Dad regret not paying more attention to pensions earlier so I'm hoping seeing a small one growing and compounding will encourage her to keep contributing more than the minimum. 

Technotrix

waveneygnome said:

OP - not sure if you have said, but do you only have the 1 child?

(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)

 

She has an older brother (18). They were both given money when my brother died, my Dad stipulated it should be put in Premium Bonds. I gave them both the choice to keep it in PB or move to a high interest fixed account along with their other savings.

My son chose that option and has his locked away in 3 year bonds earning 5+%. My daughter moved the all of her savings into PB (10k total) and has been spending some wins and reinvesting others. 

Although they were young they both understood the options and if they had both kept PB I would probably have considered a sharing agreement. 

She is planning to give him a bit though, probably £5k. He's fine with that... if it was the other way round she would probably have negotiated for half, they are very different characters!

Technotrix

Section62 said:

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?

Until 5 weeks ago I had control of the account so I could have kept the size of win quiet and split it between them (or kept it quietly invested for them until they needed it). I honestly don't think I would have done that as they made a choice about where to save their money. As it is, the letter was addressed to my daughter, she read it. She won the money, it's up to her whether she chooses to share with her brother. 

Premium Bonds are tricky. I think if parents expect them to share they should invest in their own name and split any winnings fairly. Nobody would force a child to share the extra interest if their money was saved at a higher rate... 

Technotrix

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.

We don't have the means to back up a property purchase, let alone manage it for her and cover any mortgage while it's empty or full of non-payers. I can't imagine many (just) 16 year old have the nous to do that without help, mine certainly doesn't, and she's not going to be given a btl mortgage with no income. 

If she'd won the million, it would be a different story!