What to do with my money - I’m 18

ObbessedwithDominos

thegentleway said:

The two things I wish I knew at your age would be the power of compounding (I kept all my savings in cash and should have invested the money that was not for short term spending in S&S ISA, and not completely ignore pension) and to give to charity (I delayed giving until I was well off but wish I had started sooner). 

In the run up to my 18th I started looking at various highstreet bank high interest savings accounts however I decided to wait till I was 18 as the majority of them cap the highest interest to £1000-3000. I thought it would be more beneficial to wait till I can open adult accounts. I enjoy seeing the high number in my normal spending account, but I've got to move it one day to the savings account! 

Bostonerimus1

ObbessedwithDominos said:

thegentleway said:

The two things I wish I knew at your age would be the power of compounding (I kept all my savings in cash and should have invested the money that was not for short term spending in S&S ISA, and not completely ignore pension) and to give to charity (I delayed giving until I was well off but wish I had started sooner). 

In the run up to my 18th I started looking at various highstreet bank high interest savings accounts however I decided to wait till I was 18 as the majority of them cap the highest interest to £1000-3000. I thought it would be more beneficial to wait till I can open adult accounts. I enjoy seeing the high number in my normal spending account, but I've got to move it one day to the savings account! 

Do some research around investment funds and the various tax wrappers you can use ie workplace pensions and SIPPs and ISAs and the companies that offer them. Stick with well known companies, High Street banks are ok, but also look at low cost investment companies like Hargreaves and Lansdown, Vanguard, Fidelity, AJ Bell - avoid the expensive high pressure firms like SJP. Here is a flow chart that steps you through a good plan:

https://ukpersonal.finance/flowchart/

[Deleted User]

ObbessedwithDominos said:

[Deleted User] said:

Potentially you should spend the money for experiences when you are young.

You have provided little detail. Others will therefore reply assuming you might struggle to afford a home in future or might neglect to build a pension...reasonable assumptions.

But for all we know you could be on track for a well paid career where building a pension comes easy and you will buy a home in a moderately priced area without a problem.

The point is, there are scenarios where actually spending the money would make sense.

I realised I was quite broad in my initial post. I do have buying a house at the back of my mind, however I am not in any urgent rush to move out of home. I'm not certain where my career will take me, as I am not planning to go to uni. I have considered working at my part time job, full time over summer and maybe for a year just to build up my funds if I don't get an apprenticeship or similar. It's not what I want to do my whole life, but then again it's only for the short-term. 

There is something of a dilemma. When you get to say 40 (it will creep up on you!), you might realise as many people do that 20k invested in pension or S&P since aged 18 will be growing into a serious amount. Some people are fixated with that growing pot at the expense of living a little in the here and now.

To the contrary things like a round the world trip at a young age or spending on some other passion could end up being something memorable for years to come. It can be the case that by the time you have a family such things are no longer feasible.

Bostonerimus1

[Deleted User] said:

ObbessedwithDominos said:

[Deleted User] said:

Potentially you should spend the money for experiences when you are young.

You have provided little detail. Others will therefore reply assuming you might struggle to afford a home in future or might neglect to build a pension...reasonable assumptions.

But for all we know you could be on track for a well paid career where building a pension comes easy and you will buy a home in a moderately priced area without a problem.

The point is, there are scenarios where actually spending the money would make sense.

I realised I was quite broad in my initial post. I do have buying a house at the back of my mind, however I am not in any urgent rush to move out of home. I'm not certain where my career will take me, as I am not planning to go to uni. I have considered working at my part time job, full time over summer and maybe for a year just to build up my funds if I don't get an apprenticeship or similar. It's not what I want to do my whole life, but then again it's only for the short-term. 

There is something of a dilemma. When you get to say 40 (it will creep up on you!), you might realise as many people do that 20k invested in pension or S&P since aged 18 will be growing into a serious amount. Some people are fixated with that growing pot at the expense of living a little in the here and now.

To the contrary things like a round the world trip at a young age or spending on some other passion could end up being something memorable for years to come. It can be the case that by the time you have a family such things are no longer feasible.

If you are going to travel when you're young do it on the cheap like other young people so you don't end up on cruises and in hotels with a load of old folks.

kempiejon

ObbessedwithDominos said:

Hi,
I have just recently turned 18, and now I have full access to my savings and other accounts. Most of these accounts are quite low interest and I want some opinions on what I should do for the future. The money is kinda split like this:
Cash: 15000
Savings / ISAs: 4000
Premium bonds 4000
Any advice is appreciated.

When I left school I got a full time job digging ditches for a month or so. I collected my wages, cashed in a lifetime of brithday and Chrstmas money and after buying a beautiful guitar I decided to !!!!!! off. I spent a few months in Türkiye and Greece. Now it wasn't as much as £16k in todays money but it was all I had at the time. I still have the guitar and loved the experience of being self sufficient away from the parental unit.
Or get a SIPP or an ISA.

Bizzywizard

Hi,
My daughter tuned 18 last October, on the day after her birthdayshe opened a LISA with moneybox, within a month this grew to £5000 (the extra £1000 fro the Government). Then she has another £4k to put in after 6th April this year, so she can gain another £1k of the Government. What I would point out the clock starts ticking from when you put in your for first lot of money for a LISA (you have to have something in there for a year before you can use the lisa money).

She also opened a CASH ISA Moneybox to save any of her extra money, she has.

She also switched bank accounts, so she gained an extra £175 also on her 18th birthday....a few of her friends have followed her and done the same thing!

She has three accounts for saving which a paying 7and 5%! (Nationwide, First Direct and Co op)

She has a bond that is maturing in May from Nationwide.

She is very keen to save for a mortgage....so started early! She is off to Uni in September 25 and just wanting to save up and keep the money out of reach...so she doesn't spend it on take out coffees etc!!!

Eco_Miser

ObbessedwithDominos said:

thegentleway said:

The two things I wish I knew at your age would be the power of compounding (I kept all my savings in cash and should have invested the money that was not for short term spending in S&S ISA, and not completely ignore pension) and to give to charity (I delayed giving until I was well off but wish I had started sooner). 

In the run up to my 18th I started looking at various highstreet bank high interest savings accounts however I decided to wait till I was 18 as the majority of them cap the highest interest to £1000-3000. I thought it would be more beneficial to wait till I can open adult accounts. I enjoy seeing the high number in my normal spending account, but I've got to move it one day to the savings account! 

That was probably a mistake, as the best children's accounts have very good rates, in the hope that the children will continue being customers as adults.

Also the very best adult savings accounts have low limits, see https://forums.moneysavingexpert.com/discussion/6576962/the-top-regular-savers-discussion-thread#p1 These take £25 to £500 a month for a year (usually) but pay significantly more than the same institution's other savings accounts. Spread your money around to take advantage of these higher rates.

Seeing a high number in a savings account, alongside a high interest rate, is even better than in a spending account.