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?

OP I think you did absolutely the right thing, you’re going to give him back the £10k plus the interest you’d have gained (absolute pittance if it was in a cash ISA) and he has a) had his own bedroom and in the long term will get a share of the house of which the 4th bedroom will have gained over and above the £10k many times over. Ignore the nutters on the thread.

Yes, equity fund. Over a ten year time period, it's close enough to risk-free for me. Bank accounts/cash ISAs/premium bond may have lower risk, but they're almost certain to lose value in real terms.

I'd class equities as lower risk than property, and also more liquid. Property investment is very high risk, even more so due to the gearing effect of a mortgage.

@SofiaMichelle out of interest, what fund is that?

Obviously you have different priorities. Your fil gave you a sum of money for safekeeping until he was 18. You used it on a home extension with the justification that he wouldn't have to share a bedroom with your partners son! I am shocked , to me that was never your money to spend, ever. But you think it is.
Just be honest with him, tell him what exactly you did. To spend money that does not belong to you is dishonest.
But perhaps your son will see it your way and be happy to let you have used his money for your home.
I feel so sorry for your son. How could you even think of spending his money that you were to keep safe.? What would you have done if your fil had not gave you that money ? The money should be sitting in an account with full interest for him.
As for advising him on what to do with it , you can't be serious.
If I am harsh, its because my parents used my savings I had as a minor. I never saw it nor did it make life any better. Yes the house including my shared bedroom was regularly decorated, but my savings would have been more use.
Just be honest with your son and fil.

[quote brittleheadgirl]@ShoebillStork
So why do you write about a dss?
What a bizarre thread.
What you've done is shitty and you know, otherwise why weren't you honest with your fil years ago?
[/quote]
You sound really sanctimonious. I'm embarrassed for you.

15k sounds about right.

As for you OP ya fecking tea leaf, you've reminded me I owe DS £20 I nicked from his birthday stash last week when he needed a hair cut.

I world generally classify e.g. blue chip index trackers as lower risk than property too but I don't think that's relevant here. They are both non-cash somewhat risky investments and as soon as you are not investing in cash then the point in my first post comes into play. If the OP planned to protect her son from downside risk then he's not automatically entitled to the upside benefit. You may also have been planning to protect your children's cash in which case lucky for them that you are giving them the entire upside but they're not entitled to it in that case. Also it's relatively easy to say that you would protect capital at 5k, but would you at 10k? 50k? I think the same principle applies.

@smallgoon
No need to be thanks
What an odd thing to say, very weird, are you feeling ok?

@Nataliafalka

OP I think you did absolutely the right thing, you’re going to give him back the £10k plus the interest you’d have gained (absolute pittance if it was in a cash ISA) and he has a) had his own bedroom and in the long term will get a share of the house of which the 4th bedroom will have gained over and above the £10k many times over. Ignore the nutters on the thread.

Exactly this. The child has not lost anything. He is going to be given the sum of money he would have had if the £10k had been put into a savings account.

All this chat about giving the child a proportion of the value of the house etc is totally bonkers!

@Sakari I wouldn't protect from downside risk (but nor would I expect it over that time period). It's their money, and it's not mixed with mine. If it did lose value, then I think my investment choice is still defensible.

The OP says she would have replaced the money, but if she'd gone into negative equity, then it doesn't sound like she'd have the means to do so. My take is that she took a risk on his behalf, and he's entitled to the benefits.

The lack of accountability and transparency and consequent difficulties with valuing the investment mark this as a cautionary tale for anyone acting as stewards of other people's money, whether that's a child or adult for whom you have POA.

There’s no upper limit to what his money might have got if invested speculatively, but the grandfather wanted it to be somewhere boring and safe - so that’s the relevant part here. I’d still go for 15k, and I think all interested parties would be happy.

Am now off to grovel to my children for not investing on their behalf or picking richer grandparents for them.

[quote brittleheadgirl]@smallgoon
No need to be thanks
What an odd thing to say, very weird, are you feeling ok?[/quote]
I'm great! Too busy laughing at your sanctimonious posts. Keep them coming!

You're clearly not ok. Poor thing, I shall leave you to it. Cheerio.

All this chat about giving the child a proportion of the value of the house etc is totally bonkers!

It would be if anyone had said that. What they have said is a third of the value the loft extension has added.

@Blossomtoes

All this chat about giving the child a proportion of the value of the house etc is totally bonkers!

It would be if anyone had said that. What they have said is a third of the value the loft extension has added.

Semantics - it's still over the top and not necessary to remedy the situation.

It’s not semantics at all. There’s a massive difference.

@evilkitten, I do see your point. I guess it just seems that the possibility of the OP going into negative equity seemed very remote. From her posts the loft extension appears to have paid for itself at the time with some surplus so even if prices subsequently fell she'd have built in a small buffer there. I guess she could have just put it in cash and then borrowed the extra 10k for the loft extension which would have cost her a few hundred in interest. I know it's easy to say with hindsight but she has the cash now and I assume her son won't begrudge her the fact that he saved her a bit of interest over the past decade.

To be fair I just think your been tight as and don't want to give him any interest and would rather keep it all for yourself and not give him what he is rightfully owed or what he would of gained having done what asked.

Please don't start backtracking and changing details, just because people aren't responding as you would like

It was a joke! My FIL is not a psycho who will kill me under any circumstances ...

The only responses I've been looking for are advice on how much DS would have got if the £10k had been put in a low risk investment. I've had some helpful replies - thank you! - and a lot of derails but such is AIBU.

Anyway, I've had a chat with my DS. He wants £3k on his 18th for a car and is costing how much it would be to turn his loft into an airbnb to help fund uni - his genius scheme

I think this is all bullshit. What a wind up

My god. How judgemental are people in here! A family member gave a parent £10k to look after for an 8 year old… are half of you expecting contracts and FSA clauses to be pinned up in the boy’s bedroom?! I think you did a great thing, but agree with the advice on asking son what his intentions are. House prices might not grow a lot over next few years but so best not take out if not needed, but you are being perfectly fair since you are willing to remortgage in time for his birthday.

Oh dear that thread made me laugh, well done you for investing wisely and make him benefit straight away from the investment. Thinking that the house rocketed solely on his £10000 part of a more expensive loft conversion is laughable. £15000 sounds decent, plus he seems to have inherited a good sense of business with his Airbnb. How do you feel about German students in you loft at the weekend OP? 🤣

Oh op, you are such a thief

@JackieTheFart

Well, interest rates have been very low since 2009 so realistically 1% is probably more than he would have gained in a big standard savings account.

If I were you I’d call your bank and ask about savings bonds. Find out the rate they’re advertising and use an online calculator to work out how much interest he would have got over 12 years.

For a Junior ISA or children’s account they have been higher - in 2011 you could get over 3% in a junior account and even now you can get 1.25% in a Children’s account. Challenge with the plan to pay the equivalent of a junior ISA is - if house prices had fallen would you still be giving back the initial amount plus interest ? If not then in fact the investment was a high risk investment in property and should get the share in property value increase as other posters have said