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    • cisamcgu
    • By cisamcgu 5th Jan 18, 6:41 PM
    • 65Posts
    • 37Thanks
    15,000 - ideas for long term investing
    • #1
    • 5th Jan 18, 6:41 PM
    15,000 - ideas for long term investing 5th Jan 18 at 6:41 PM
    Dear All,

    My daughter is at University, and is going to get AUD$30,000 (approx. 15,000) for her 21st birthday in March.

    She already has about 8,000 in premium bonds and about 18,000 in a S&S ISA, and the 15,000 is a gift from grandparents, who would like her to use it for something important, perhaps in the future (house, car, etc..)

    Other than sticking it into the S&S or buying more PB's , what else could she do with it in the long-term - nothing too complicated though ?

    Thanks in advance
Page 1
    • eskbanker
    • By eskbanker 5th Jan 18, 8:01 PM
    • 7,431 Posts
    • 8,001 Thanks
    • #2
    • 5th Jan 18, 8:01 PM
    • #2
    • 5th Jan 18, 8:01 PM
    AUD$30,000 (approx. 15,000)
    Originally posted by cisamcgu
    Good news, at the current exchange rates that A$30K will actually be worth 17,394 so that's 16% growth already!

    If the intention is to buy a property then it would be worth her opening a Lifetime ISA, into which she could contribute 4K before 5 April and another 4K on or after 6 April, which would then be boosted to 10K in total by the 25% government bonus.

    She'd still need a home for the rest, S&S is likely to be suitable for genuinely long-term growth but if she'll be looking to get onto the property ladder within, say, 5-7 years, and potentially needing as much as she can lay her hands on for deposit, furnishing, etc, then staying in cash is likely to be safer, see the 'how to start saving' and 'top savings accounts' articles linked further up the page.
    • ValiantSon
    • By ValiantSon 5th Jan 18, 8:10 PM
    • 2,013 Posts
    • 1,863 Thanks
    • #3
    • 5th Jan 18, 8:10 PM
    • #3
    • 5th Jan 18, 8:10 PM
    I think you've exhausted the best options. Why wouldn't she invest it in her S&S ISA?

    If it were me I'd ditch the premium bonds, however, as I just don't see the point of them. You could win big, but you almost certainly won't. You could make the average return of 1.4%, but you easily might not. 1.4% is hardly a great rate anyway! If she stuck the 8,000 in a fixed rate bond for 1 year then at present she could earn 1.8%, i.e. 144, as opposed to a theoretical 112 with premium bonds. In the fixed rate bond she has a guaranteed 144, but in premium bonds she has no guarantee of any return whatsoever. When she graduates she can look at moving some (all?) of that money into interest paying current accounts, regular savers and easy access savings that will all pay her a guaranteed rate (and many of them above the notional 1.4%) and use that as a "rainy day fund".

    Meanwhile, she could have 33,000 in a S&S ISA making much better returns over the long term.

    If she wanted she could try P2P lending, but I wouldn't if I were her. As far as I can see it is riskier than a well-diversified S&S portfolio and doesn't offer any tax efficiencies.

    A final thought would be opening a S&S LISA with 4000 of it and drip feeding 4000 in each year.
    Last edited by ValiantSon; 05-01-2018 at 8:13 PM.
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