To ask for help with financial pickle

[ShoebillStork]

In 2009 FIL had a win on the Premium Bonds. He gave us £10,000 to invest for DS (at low risk) and the money to be given to DS when he's 18.

I put the money towards a loft conversion. DS is 18 soon and I'm due to remortgage for a better rate. How much do I need to release for him so he gets the £10k plus what it might have gained in interest since 2009.

And should I encourage DS to get a Help to Buy ISA with it?

Disney ey???
I'm going to borrow my daughter savings and invest in Disney, split the profit 50:50. That has to be better than the 0.10 her junior savings account is paying.

For the record my daughters savings are my money saved by me for her. If I change my mind at any time before she is 18, the money is still mine.

That fund is not high risk at all - I'm invested in it and can tell you the underlying stocks are Apple, Nike, Coke, Amazon, Netflix, Diageo, Colgate and a couple more. Hardly the equivalent of roulette.

But things can change so very quickly and huge behemoths can crumble so suddenly, let alone over a decade or more. What if you'd invested in MySpace, Bebo, Debenhams or even VW, intending to cash out around the time of the emissions scandal? ITV invested a colossal sum in buying Friends Re-united and had to write the whole lot off.

Also, I think it depends on your personal definition of low-risk. Putting money into a bank account is unlikely to reap huge dividends, but at least they never have to give the (admittedly standard) warning that you may lose your money, as you simply won't - even if the bank fails, up to £85K (IIRC) is guaranteed by the government - and that may be as 'daring' as some people think it wise to ever go.

I was just thinking it sounded a bit like the parable of the talents...

So was I!

I invested 8k in Disney shares in April 2020 and they're now worth 11k.... So it depends what you would have invested your DSs money in.

Was that not spiked dramatically by everybody signing up to the perfectly-timed, newly-launched Disney+ all at once during lockdown, though? Genuine question.

I would never invest money in cash if a child is young. The market trends up, its just a lottery as to what its all worth when you actually need to take the money out.
I'll sell my Disney shares in a year or two (when parks are open again and you would think shares are up even more) I gambled on share price being at an all. Time low as parks couldn't open due to covid, but the gamble was assuming they could reopen again in a year or two and get back up to pre pandemic levels of profit. Disney plus did well in lockdown so that plus an increase in Park traffic should really make that a good investment. Like an apple share in 2009!
Cash doesn't earn you much.

There may or may not be an issue with how the OP invested the money which I guess is what this thread is about, but there should be a huge issue with a man who has allowed his father to gift one of his sons a huge amount of money whilst ignoring the other one.

I agree, actually. In spite of giving a gift of £10K, he does not sound like a nice man at all. The older lad has been blamed and punished by his grandad for all of his life for the 'crime' of being an egg that was fertilised and subsequently being born.

However much the money ends up being agreed at, I think that, although there's no legal obligation, if the younger grandson doesn't split it 50/50 with his brother, the relationship between them may never heal - which I wonder might have been the grandad's plan all along in giving the money.

@WeBuiltThisBuffetOnSausageRoll

I was just thinking it sounded a bit like the parable of the talents...

So was I!

Glad it wasn't just me!

I notice that you say that FIL gave us the money, and then I spent it...Did DH/DP have any say?

Most low risk investments haven’t kept pace with inflation since 2009.

Looking at RPI £10,000 in January 09 would be worth £14,468 today.

So something around that mark would seem fair to me.

DS’s low risk investment was a loan to his loving mamma. Give him 3% compounded and he will come out of this very well indeed.

@arithanaggerton

I'm really sad for the stepson if this is real.

His grandfather can't stand him through no fault of his own and nobody stood up for him.

The inequality is abhorrent from the adults on the older son. Actually shocking.

We bought a house around that time and it has gone up by around half of what we paid for it. If you use that logic £15K should be about fair.

You were told to invest however you see fit and give it to DS at 18, which is exactly what you have done. Ignore the idiots that are suggesting you stole it

Id say about 14k, not sure you can open a help to buy now but a lifetime isa may be a good idea

This thread has been a great read. So many sanctimonious people. So funny.

The ds hasn’t only come out of it with 15k, he’s had the benefit of a nice room with en suite at the same time.

I’d say it was a prudent investment for him and the op.

I do feel a bit sorry for the dss though.

“caringcarer

I have read your updated and am appauled at your lack of shame for what you did without consent from giver. if I was your child I would take you to court for stealing.“

It was not stealing it was investing.
OP was told by the giver to invest it safely which she did…..in a house. Everyone knows property is the best way of investing money safely. Anything in a bank gets less than the rate of inflation.

This is batshit. If the housing market had collapsed, would everyone be saying DS was due only 5k, as you take your risks with an investment? No, right - if that had happened he would clearly still be owed his 10k.

Therefore, he hasn't "invested" it in the house, and he should get the 10k plus interest, as the OP planned. 15k sounds on the right side of generous.

As an aside, I think if you gift money to someone for their child, it should be up to them what they do with it, whether that is spending on essentials, non-essentials, or investing. The parent is best placed to decide what will benefit the child most.

@ShoebillStork you've done a sensible and wise thing and hope you've found the answer here.

I'm afraid this thread has brought out mumsnets finest lunatics. I hope your good humour in the face of their various accusations doesnt upset them further

Can't believe some of these posters, you'd think the poster had spent the money on drugs and handbags. Instead of increasing the value of his eventual inheritance and giving him a nice bedroom.
He will be 18 years of age, unless he is very sensible and you know he would invest it wisely why on earth would you give a teenage boy any more than the necessary. Maybe a few years down the line, if he still has the money, you can top it up and help him buy his own property, but I wouldn't be giving in him any more than he would have got from a standard savings account.

I have gifted money to my grandchildren, they are to get it at 21 what their parents do with it between now and then is nothing to do with me, I will be angry if they don't receive this money on their 21st birthdays. And if my children yeilded a 50% profit then I will be elated.
Op I love your way of thinking and I think you have been morally right and responsible with this money.

This is batshit. If the housing market had collapsed, would everyone be saying DS was due only 5k, as you take your risks with an investment? No, right - if that had happened he would clearly still be owed his 10k.

As a parent you share the good things and shield from the bad things. If the OP makes extra profit from the way she invested her son's inheritance she should share it not keep it for herself. She was told to invest it safely, so if she decided to take a risk with it and it didn't work out then she would still owe him the capital and a bit on top.

@ShoebillStork

You need to work out the value of the house before and after the loft conversion, calculate the change in value, work out the proportionate value allocated to the 10k and then add 12 years interest on top

God no, he's not getting that much! The value of the house has sky rocketted! I just need to work out how much it would be worth if I'd bunged it in a Junior ISA or something lame!

I’d agree with the first part of this. Forget the interest but the return should be proportionate to the investment. As a “savvy” investor that’s what you’d expect in his position @ShoebillStork. Either that or you should pay interest at the rate you’d have paid on a loan from the bank.

Regardless of the somewhat dubious morality of how this money was used, it’s really shocking that you take such a high handed attitude to the amount he’ll get back. Given that his money was invested in an asset that “sky rocketed”, his return should have risen proportionately.

The really shocking thing about this thread is how entitled so many people seem to be with money that doesn’t belong to them. The inequality in gifts is nothing to do with OP, it’s up to her partner to take it up with his dad, it’s certainly not up to her son to make things equal.

And all the suggestions about not handing the money over until he’s 21 or 25 - what part of it’s his money are you all failing to understand? The giver stipulated 18, it should be handed over without strings on his 18th birthday.

I hope none of you are ever executors of wills if you think you can just change things to suit your notions of fairness.

And all the suggestions about not handing the money over until he’s 21 or 25 - what part of it’s his money are you all failing to understand? The giver stipulated 18, it should be handed over without strings on his 18th birthday.

Well someone has never seen what happens when teens inherit large trust funds at the same time they discover drinking

Regardless of the somewhat dubious morality of how this money was used, it’s really shocking that you take such a high handed attitude to the amount he’ll get back. Given that his money was invested in an asset that “sky rocketed”, his return should have risen proportionately

It has. Eventually it will be part of his inheritance or do you think to be perfectly fair his brother shouldn’t get 50% of op’s estate as the grandfather decided to only give one of the brother £10,000 and the uplift in the houses resale value shouldn’t be split with his brother eventually.

I think we have a very different type of family finances. As parents we pay for everything but then children help us out without question when we are struggling.
They know we will pay them back and they would rather the mortgage was paid rather than not helping and seeing their money in their bank account but then not having a place to live.

But the son already benefitted from the decision to do this - if the op had just put thr money in an ISA, he would still get around £14k, but would have had to share a bedroom with his half brother. He would have parents with smaller assets who wouldn't potentially leave him as much money, or the OP would have had to borrow the money to do the loft conversion, and therefore repaying that would mean less disposal income for the family, giving him a lower quality of life as a child.

He gets the same amount of money, he gets to have had the big bedroom, he gets to have had the days out and treats as a child, he gets to have parents who will potentially leave him a decent inheritance - but that will be shared with his half brother.

He should be put in the same position as if he would have been if they had just shoved the money in an isa in the first place.

If you can release a little more, perhaps the half brother should also get £3k towards a car. Its not his fault his grandfather is a twat.