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?

Yep - because of the amount of money involved. What i wouldn’t give for another decade of investment performance and if someone robbed me of it for their loft extension…. I would not be happy.

@sunglassesonthetable I’m not the only one. Another poster explained their own scenario where DH had doubled their DD fund in approximately same amount of time. Think it’s on p22.

What i wouldn’t give for another decade of investment performance and if someone robbed me of it for their loft extension…. I would not be happy.

yep clearly not the mindset of 17 year old.

Thanks Mum, cool room, going to do my Air BNB in it...

*I’m not the only one. Another poster explained their own scenario where DH had doubled their DD fund in approximately same amount of time. Think it’s on p22.
*
Excellent work poster on page 22. Clearly specialist.

@sunglassesonthetable Exactly, which is why the OP was supposed to do the right thing with the money, not line their own estate in the short term.

When you remortgage you now have to add 15k to the bill. It might have sounded like a good idea at the time but you’ve just added another few years to your mortgage.

not line their own estate in the short term.

= provide an excellent space for DS growing up and not forcing DSS and DS to share on visits.

@Twoforthree

This thread keeps on giving 😂

Indeed. This one nearly floored me

I think you need to be very careful here if your DS found out and felt he was out of pocket he could sue.

HAHAHAHAHAHAHA

But how old was DSS when the loft conversion was completed ? If he was 16 and staying every other weekend thats different to 6 and staying half the time. As its much easier to tolerate a share once a fortnight knowing someone is likely to either be off to uni in 2 or 3 years or working and possibly staying with a partner at the weekends/ getting their own place. I think it matters in terms of the benefit DS gained by not having to share... how much time he actually avoided sharing for.

I would absolutely love to know what low risk investment portfolio you'd have picked that would get 50k off a a 10k investment.

You have gone round the bend.

it matters in terms of the benefit DS gained by not having to share... how much time he actually avoided sharing for.

That is the decision his mother made.

@sunglassesonthetable Yes I guess it is the decision she made. Just thought of it because if DSS only had a couple or a few years left and was only every other weekend I wonder if one of those bunk beds that have a desk underneath could have been used in the office room.

@TSSDNCOP. Read the whole post. 10k to 50k depending on risk.

2009 to 2021 - it’s actually 12 years of investment, the rule of thumb is when investing in this is to double your investment every 5 to 7 years. 10 to 20, 20’to 40. One fund which i have mentioned earlier, would have done that, it’s been doing it for two decades now like clockwork. And in terms of risk…. Yes it’s relatively low. That’s why it’s the largest in the uk now, and it’s not the only one.. but it is the least risky.

Not bonkers. Just lucky someone gave me a few pointers once, as my families idea of financial education was non existent.

@sunglassesonthetable

FIL. £15,00 you say, lad ? Excellent.

DS Yeah thanks Gramps. Want to go for a spin in the wip? Just round the block though. Got to run the hoover round the cool attic room. I want to keep my 5 star rating.

I know, ridiculous. DS is not going to be hoovering.

Oh he's already got that worked out. He's going to pay our cleaner to get the cool loft room changed over for guests!

sunglassesonthetable Yes I guess it is the decision she made. Just thought of it because if DSS only had a couple or a few years left and was only every other weekend I wonder if one of those bunk beds that have a desk underneath could have been used in the office room.

Mothers are mostly the ones at the coal face of family life and it's not all about % and figures on a page.

OP had to make this situation work. And there were clearly lots of practicalities that came into it that involved the here and now.

Will FIL not ask DS exactly what has happened to the money and how it grew with the investments?

No. FIL has never had any investments other than Premium Bonds and his work pension so he is not financially savvy and not going to start discussing gilts and funds and equities (or whatever people are discussing on this thread).

And obviously I was joking about taking £257 (or whatever) as a "management fee".

Honestly, some if you are dense or humourless or probably both. And unintentionally amusing

@sunglassesonatable. Ok fair enough. Im sure lots of people here who empathise with that statement and FIL and DS very well might after breifly huffing and puffing. That would probably be the sort of thing that Op would need to say to them and just refuse to discuss the sitiation further, ' respect my decicion, I did what I thought best'. Op says FIL will 'kill me' but in reality what can he do other than be slightly grumpy over it for a bit?

The investment of £10k was in residential property (which is low risk, or you wouldn't get a 90% mortgage at such low rates). Using the Nationwide BS calculator... www.nationwide.co.uk/about/house-price-index/house-price-calculator#tab:HousePricecalculator ...set for the whole country gives a value now of £15,473 (see photo).

You can also do it on a regional basis - for example, in Greater London the result is £19,885. The Halifax Index would give a very similar result.

FIL might surprise you and be pleased your property increased and you are giving DS interest if he doesnt have a clue about anything other than premium bonds. Probably best not justify by saying it will all go to DS ! I know of a situation where not only did the family home need to be sold to pay care home fees but then the son managed to die just before his very elderly mother! He was suposed to get the lot too !

Whatever you decide to give your son just be careful of the tax implications of gifting money, because this is essentially what it will now look like - a parent gifting a child money - as even though you were given it to be given to your child (the grandchild) it wasn't at the time and was used for your own personal use (in the eyes of the law).

So going forward now, you are able to give cash gifts of up to £3000 per tax year without any tax liability. You can bring forward any amount you didn't use from the previous year but you can only do that for one year so, for example, if you didn't give any of your £3000 allowance in 20/21 you can give £6000 in 21/22.

= provide an excellent space for DS growing up and not forcing DSS and DS to share on visits.

1. Only because the OP is framing it as creating a bedroom for DS. When actually, there were enough bedrooms all along, but DP was hogging one for WFH and piles of stuff. Really, the loft conversion can equally be framed as creating an office space for DP that meant he wasn’t taking up a bedroom. The fact DS has had a swanky room is a red herring.

1. Loft conversions cost more than £10k; OP obviously had some other money and could have invested DS’ money as she was supposed to, and continued saving towards the loft conversion. She states she’s a high-rate tax payer so had the ability to save. She didn’t actually need to do this.

While I don’t go as far as thinking this is genuinely fraud or theft, I do think she’s trying to have it both ways – claiming it as a clever, sound investment that’s paid off in an increase in house value, and yet not giving her DS the monetary outcome of that investment, trying to pluck numbers from the air and refusing it being more than £20k. Doesn’t matter that he’ll inherit the house – presumably that was always going to happen (and isn’t guaranteed given care gone fees etc). The £10k+profit is supposed to be on top of, and separate from, any inheritance the OP chooses to leave him.

(Also: poor DSS in all this.)

I was just thinking about the step-son.

OP says that he son will eventually inherit 100% of the house, so is there no provision being made in wills for the step-son? If not, he could contest and be awarded 50%, thus the son not actually getting 100%.

Just a thought.

And can you lot stop trying to make out I've nicked DS's money. He got a cool bedroom (his words), will get £10k plus interest and will inherit the lot when I croak. Which will be very soon if FIL finds out ...

You did nick it though. That's why you can't tell him, and FIL. At least you're aiming to give it back, which is good. I couldn't do that if DC was gifted money, I'd feel terrible.

Although can't see why you didn't just release money from the house in the 1st place to do a room for him.

You said you have a FIL so I guess you're married. In which case you can't guarantee your Son will inherit all.

It was a gift to your Son, not you. As for Help To Buy - don't tell him what to do with his money as your attitude towards his money is off-key.

Give him £20,000 as you had a cheek in the 1st place + his money has paid for improvements which have added value to your home. He has a financial interest in the property.

Wow OP there’s a whole bunch of weird judgy folk on here with no sound knowledge of investments. What would have been better? Sticking it in a 0.1% interest account???

Ok so to calculate benefit you go - price of house then, price of house now. % of original price that 10k constituted , then what is % of what it is worth now.

Your son is lucky to have a canny mum. It’s probably at least double what he was given originally :))

You've got to make sure you give him a percentage of the uplift in property value as well as the interest on the original capital over 12 years. Eg if your house was worth £300k before the loft conversion, which cost £30k (10k or 30% of which was Ds's 'investment') and your house is now worth £375k, then you owe him 30% of the increase in value (£75k) plus 12 years' interest in the original £10k at say 2.5% per annum.

No OP hasn't got to make sure she gives him an uplift in property value, that's ridiculous!

Op great investment which your son benefited from and now he's getting the cash back as well. Win win!