Teenager savings/investment

MadamBT

My 17 year old son will receive somewhere in the region of £35-40k from a compensation claim. He may well be 18 before he actually gets the money but either way I am looking for advice because it’s a rather large sum. I’ve never had enough money to look into investment and am a bit risk averse anyway, so guess I’m asking about savings, ISAs etc? I saw a Martin Lewis video on similar situation which basically said don’t spend money on student fees, but keep it for a deposit on a house. That made a lot of sense. But until he gets to house buying age then, where should we put the money? Thank you! 

Emmia

If he won't need the money for 5 - 10 years (or more) an S&S ISA is the way to go.

I wouldn't put it in a LISA as that limits what the money can be used for - but I can see the attraction of them.

TheMilkmansDad

I'd open up a LISA and drip feed £4k per year. Keep the rest in a Fixed savers.

Albermarle

Lifetime ISA (LISA): how they work & best buys

Savings | MoneySavingExpert

MEM62

MadamBT said:

I’ve never had enough money to look into investment and am a bit risk averse anyway, so guess I’m asking about savings, 

The starting point is that this money should not be saved or invested based on your appetite or tolerance for risk - any decisions should be based on your son's tolerance for risk.  And in the longer term, wise investing will have less risk than saving.  

MadamBT

MEM62 said:

MadamBT said:

I’ve never had enough money to look into investment and am a bit risk averse anyway, so guess I’m asking about savings, 

The starting point is that this money should not be saved or invested based on your appetite or tolerance for risk - any decisions should be based on your son's tolerance for risk.  And in the longer term, wise investing will have less risk than saving.  

Well, the challenge here is more that I wouldn't know a wise investment if it stood right next to me, so until he is 18, I'm only really comfortable making less risky choices on his behalf. I've not had much luck so far finding good advice on what risk looks like v what potential benefit, so any links to a good newbie guide to investment would be more than welcome if you have it?

MadamBT

Emmia said:

If he won't need the money for 5 - 10 years (or more) an S&S ISA is the way to go.

I wouldn't put it in a LISA as that limits what the money can be used for - but I can see the attraction of them.

Yes the bit about keeping options (relatively) open seems a good choice, I'll look into those

MadamBT

TheMilkmansDad said:

I'd open up a LISA and drip feed £4k per year. Keep the rest in a Fixed savers.

I'll investigate what a LISA is but I don't have the funds to do any drip feeding other than what I'll be putting towards living expenses while he's at uni, so that might change that?

Emmia

MadamBT said:

TheMilkmansDad said:

I'd open up a LISA and drip feed £4k per year. Keep the rest in a Fixed savers.

I'll investigate what a LISA is but I don't have the funds to do any drip feeding other than what I'll be putting towards living expenses while he's at uni, so that might change that?

Once your son is 18 the money is his, you wouldn't be controlling it...

LHW99

When he is 18 he can put £20k into an ISA, this could be cash or S&S. of that £20k, £4k can be added to a LISA, and gets a Government bonus.

If he get the money soon, then surplus could be put into premium bonds (any winnings are tax free, but likely to be small) until next tax year and then moved into an ISA of some kind.

Money in a LISA has to be used for a first house, or for reetirement.

Cash ISAs can be transferred to S&S (and vice versa) at a later date if he decides he prefers one or the other. LISAs are only transferable from one LISA to another..