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?

@Beastieboys Except that she’s not paying the son the investment return that the investment achieved.

*A lot actually depends on the attitude of the FIL, if he believes this was inappropriate, which given the secrecy, one can argue is likely, then the CPS may go for the throat.

*
Would this be the MOST boring crime doc ever? Unraveling the machinations of the ( secret) loft extension details.

But if the CPS went for the throat it might get really good. 🍿

OP, fwiw, I’m fine with what you’ve done. And I generally would side eye parent’s use of child’s money.

Here’s what I would do…. Look at a money market return on investment (safest investment option, basically a glorified savings account), a bond rate of return (2nd safest option, typically ~4-5% roi), and then whatever your equivalent index (maybe FTSE?- I’m in the US so it would be the S&P 500 - I think it has the 5 year rate of return at ~8-9%) then average those 3, use the calculation for compounding interest and give him that.

Show him the math and and either give him the money in a lump sum or give him what he wants for the car and continue to do the tracking until he wants/needs the money for something in the future*.

*may be a risk to you if house value tanks or circumstances change for you in the future.

@Theo1756 it's interesting though because my dp was looking at the junior isa he invested for his daughter - similar amount and timescale, and it has definitely doubled. So not a stretch of the imagination at all! The pot has doubled to just over £24k!

@Theo1756 For the financially unwise yes…. But 5 minutes with a decent advisor will tell you that 7% is normal, and if you looks at the likes of fundsmith equity, a decent uk based ETF, they have returned 18% on average for the past two decades. If you want a tracker, you go for the SP500 and get the 8% over there….

As it stands the kid is barely getting more than a savings account. That’s not investing.

Give them anything less, it is straight theft

No it's not. Stop being daft!

@sunglassesonthetable Most crimes are boring, unless you are the victim.

@sunglassesonthetable

She may not have set out to but that’s sure as hell what she’s doing now.

That's what you said and yes it was bum.
Can't even see how she's profiting now.

No help for you then. You don’t want to see.

The OP clearly stated the following on page 19....

Much more tax efficient as a higher rate tax payer to put money in my pension. Also meant I could continue to claim Child Benefit.

To me, this is blatant PROOF that she knew she was defrauding the State never mind the fact that she didn't consult her FiL about putting this money that WAS NOT HERS into HER house.

Illegal all the way!!

[quote Bard6817]@ChequerBoard I can accept that many will take that view.

However, What about not providing the full value of the investment return to her son? 30% for an investment return of a decade isn’t small, but it equates to marginally over 2.5% per annum, and any investment doing that isn’t worthy of the name. Investment returns of 5-7% pa are normal for the financially unaware, and 18%pa is regarded as achievable. Rule of thumb is double the investment every 5 to 7 years. That makes the kids investment about 30k. However, in this case property, has increased in value, and the investment isn’t providing the return that property has achieved.[/quote]

OK so now you accept it's not theft and your talk of CPS was all hot air.

This latest effort is similarly a load of bollocks. Anyone with a saving account knows how low interest rates have been during this period (2009-2021).

All the OP needs to do is ensure the her son has the value of the £10k plus whatever interest it would have earned in a simple account over that period.

Making up crap about 30% returns is just nonsense - OP isn't a financial hotshot investor and even if she was, this kind of return is not achievable with £10k.

@Harmonypuss

The OP clearly stated the following on page 19....

Much more tax efficient as a higher rate tax payer to put money in my pension. Also meant I could continue to claim Child Benefit.

To me, this is blatant PROOF that she knew she was defrauding the State never mind the fact that she didn't consult her FiL about putting this money that WAS NOT HERS into HER house.

Illegal all the way!!

But even Martin Lewis has advised on MSE to do this. It's not illegal. Immoral maybe 🤷🏼‍♀️

[quote Bard6817]@HollyGoLoudly1. No it’s actually far more serious, the amount involved would not get a caution, the CPS would be seeking jail time.[/quote]

and whilst I was in prison, DS would probably turn the whole fucking house into an Airbnb!

@ChequerBoard No I didn’t say i agreed, i said many will take that view.

And as for the hotshot investor comment…. One of the largest funds in the Uk, fundsmith equity, is very well known and used as a simple dump your money in and walk away. It averages 18% per year. It’s not a secret, or hard to do. the biggest thing people do is make sure they pop it in an ISA or a SIPP. This is all basic entry level stuff. 10k investment would be worth over 50k after a decade. Maybe now you get the scale of the issue for the lad.

Most crimes are boring, unless you are the victim.

Cheers for that .

Bard I do get the feeling you're just making sure we all know, that you know, LOADS about stuff.

I ref your previous post. 😬 Oh that the rest could be getting the 18% interest.

But anyone withe an ounce of common knows that NO ONE - Police, CPS, HMRC is interested.

Using this calculator at a 8% rate of return (which would be on the high end for a low risk investment) the end amount would be $26k obviously this us US but sub in £ and you get the same.

5%= $18K
2%= $12K

www.nerdwallet.com/banking/calculator/compound-interest-calculator

[quote Bard6817]@ChequerBoard No I didn’t say i agreed, i said many will take that view.

And as for the hotshot investor comment…. One of the largest funds in the Uk, fundsmith equity, is very well known and used as a simple dump your money in and walk away. It averages 18% per year. It’s not a secret, or hard to do. the biggest thing people do is make sure they pop it in an ISA or a SIPP. This is all basic entry level stuff. 10k investment would be worth over 50k after a decade. Maybe now you get the scale of the issue for the lad.[/quote]

That's not a low risk investment, you aren't comparing like with like. If it was low risk it wouldn't have lost almost -8% over the pandemic period.

Interest rates in a savings account are low, but you will never actually lose money in one.

OP isn't a financial hotshot investor and even if she was, this kind of return is not achievable with £10k

But she says she is, she’s boasted about being financially savvy. And that return is achievable because she has achieved it. She’s just refusing to pass the profit onto the person who supplied the money. She’s certainly savvy enough to arrange her finances so the taxpayer, as well as her son, has subsidised her.

No help for you then. You don’t want to see.

Thanks for the help. But don't need it. I'm fine with it.

If I have a member of my family money for their child I would expect it to be put into bonds etc not to enhance their lifestyle.

[quote Bard6817]@ChequerBoard No I didn’t say i agreed, i said many will take that view.

And as for the hotshot investor comment…. One of the largest funds in the Uk, fundsmith equity, is very well known and used as a simple dump your money in and walk away. It averages 18% per year. It’s not a secret, or hard to do. the biggest thing people do is make sure they pop it in an ISA or a SIPP. This is all basic entry level stuff. 10k investment would be worth over 50k after a decade. Maybe now you get the scale of the issue for the lad.[/quote]
Equity funds are generally not considered low risk.

Savings accounts are generally not considered investments.

One of the largest funds in the Uk, fundsmith equity, is very well known and used as a simple dump your money in and walk away. It averages 18% per year.

I'm all over this Bard! Why I have been taking notice of Martin Lewis all these years. Thank you for the tip.

@sunglassesonthetable I use Martin Lewis too :)

But if you have investments to make, Fundsmith and Vanguard will make your money work for you.

18%, Low risk, dump and walk. I'm there.

Genuinely thank you for the tip @Bard6817. I’ve just checked out Fundsmith Equiry, it’s outperformed my investments in every year except 2018. I shall investigate further tomorrow.