Page 30 | To ask for help with financial pickle

ShoebillStork · 2021-06-19T17:11:05+00:00

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?

ChequerBoard · 21/06/2021 14:27

@AmaryllisNightAndDay

This thread is totally hilarious.

What is so hilarious about it? I had to think this through for myself for real, and it wasn't hilarious. I just don't agree that her suggestion for figuring out how much money to return is really ethical. If that's hilarious to you then you have an odd sense of humour.

she has always intended to give her son the money in full (plus interest) at the relevant age.

There are two dodgy bits here: first of all, what she would have done if she'd had to sell at a bad time and couldn't have met her good intentions to repay him; and second, whether he will be getting all the money she made from his 10K or whether she intends to deprive him permanently of some of it. If there's a big difference between the amount she intends to repay and his share of the rise in value of her property, then that's a dodgy decision.

She says herself that she is in a pickle.

I would hardly think being able to give Ds his own room over the last 12 years and the subsequent uplift in the value of the property is akin to putting £10,000 on the 4.30pm at Newmarket

It's not perfect but it was the closest comparison I could find. If she'd had to sell at a bad time she could have lost it.

Anyone tell me where these safe investments that pay 5% interest on my money.

Well that's the point. Basing it on a (realistic) safe investment is likely to give him a lot less than basing it on the value of the house.

'Well that's the point. Basing it on a (realistic) safe investment is likely to give him a lot less than basing it on the value of the house.'

You've said it yourself - basing it on a safe investment/savings account is realistic. The reason it's realistic is because that is what have would have happened to the money if OP had not used it as she did.

Anything else is speculative nonsense.

DoubleTweenQueen · 21/06/2021 14:32

I would have though a stocks&shares ISA with a good tracker fund/etf would have yielded more that 5% a year over the 12 years - pretty low risk.

Vergingontheridiculous · 21/06/2021 14:34

Actually the only way it's not speculative is to work out the proportionate increase in the property value, on the basis of a valuation, which will be needed for the remortgage anyway. Anything else is purely speculative, as it would be based on a hypothetical investment that was never made.

AmaryllisNightAndDay · 21/06/2021 14:35

Anything else is speculative nonsense.

The rise in value of the house is also a fact. She is going to have it valued for re-mortgaging. It is how she actually invested/spent the money.

MRex · 21/06/2021 14:45

The original request was explicitly stated as premium bonds. The DS could have gainedess than bank interest from various £25 winnings, or he could have won one or more of the large prizes, say £25k or £1m. £10k investment buys a lot of bonds and despite a win being rare, 10 years is a long time to hold them. I happen to know multiple people who've had large gains from them.

What some people seem to be confused by is that this wasn't ever the mother's money; it belonged to FIL and then the son. OP diverted it instead of managing it in the way requested. The OP deprived DS of a safe gamble on a big win because OP decided to do something else that affected his possible gains, so at that point she was by default taking on financial management responsibility. It isn't possible to judge what he would have earned from the other route as it could have been higher or lower. The gains can however be clearly calculated from the action she actually took, which was property investment. If OP wasn't his mother, nobody would suggest she should be giving him anything but the full profits he's due on the property investment.

MRex · 21/06/2021 14:45

gainedess = gained less

Twoforthree · 21/06/2021 14:57

I’m not sure that fil actually said premium bonds - just a low risk investment.

If it makes you frothers happy then perhaps the op could give her ds a greater return on his investment then he can fund himself through uni. As it is I’m pretty sure they will go above the minimum payments if necessary.

It balances the books for you all…

Sadiecow · 21/06/2021 15:08

The original request was explicitly stated as premium bonds

Was it???

Sadiecow · 21/06/2021 15:10

@Blossomtoes

She's borrowed the money and is returning it with interest

As little interest as she can get away with.

Says who?? She has asked for the best way to calculate it and was asking for answers.

She did not say I am going to just give him £30 extra and that's it!

Sadiecow · 21/06/2021 15:11

@AmaryllisNightAndDay

She's borrowed the money and is returning it with interest.

But possibly not all she owes.

Or possible more!

purpleboy · 21/06/2021 15:17

Op this thread is bonkers.
Clearly you are not a thief, you've invested in a property that will end up in your sons hands, as well as giving him the full initial investment plus interest and he got to live in a cool room!
Good on you!

Original poster

ShoebillStork · 21/06/2021 15:37

She says herself that she is in a pickle

The pickle in the title was that I was unsure how to calculate the amount DS would have got had I put it in a low risk investment as FIL requested. I knew wise Mumsnetters would give me some guidance THANK YOU and everyone else would give their twopenneth worth as well

I've decided to release £15k on the mortgage. DS will be delighted and thank his grandad profusely. If he wants more then he can sue me, I'll be sure to tell him to PM all the legal experts on this thread

OP posts:

Grellbunt · 21/06/2021 16:29

I do feel sorry for his stepbrother. Wonder how he will feel when he hears about your son's £15k.

championthewonderhorse70 · 21/06/2021 16:59

@MRex

The original request was explicitly stated as premium bonds. The DS could have gainedess than bank interest from various £25 winnings, or he could have won one or more of the large prizes, say £25k or £1m. £10k investment buys a lot of bonds and despite a win being rare, 10 years is a long time to hold them. I happen to know multiple people who've had large gains from them.

What some people seem to be confused by is that this wasn't ever the mother's money; it belonged to FIL and then the son. OP diverted it instead of managing it in the way requested. The OP deprived DS of a safe gamble on a big win because OP decided to do something else that affected his possible gains, so at that point she was by default taking on financial management responsibility. It isn't possible to judge what he would have earned from the other route as it could have been higher or lower. The gains can however be clearly calculated from the action she actually took, which was property investment. If OP wasn't his mother, nobody would suggest she should be giving him anything but the full profits he's due on the property investment.

No it didn't. It sayid the FIL got money from premium bonds and told OP to invest it at low risk. He didn't tell her it had to be premium bonds

sunglassesonthetable · 21/06/2021 17:06

f OP wasn't his mother, nobody would suggest she should be giving him anything but the full profits he's due on the property investment.

The whole point IS that she's his mother.

A financial adviser wouldn't give a stuff if DS had his own cool bedroom to escape to or whether he and DSS liked sharing or anything else before the 10 year payout.
Don't suppose the financial advisor would be leaving the house to DS either. The ultimate beneficiary of any home investment.

sunglassesonthetable · 21/06/2021 17:24

Rexy

Obviously it wasn't explicit enough because you're quite wrong about the Premium Bonds.

That's where FIL got the money not where he asked for it to be

🙄

And yep, like the lottery some people do win.

OP
Happy Birthday Son I put some money from Gramps in Premium Bonds unfortunately no wins.Here's £10,000. Oh and DSS is coming this weekend can you move your stuff so he can kip on your floor again? Remember to thank Gramps.

DS
Cheers. 🙂

Or

OP
Happy Birthday Son Can you come down from your cool bedroom so we can go and pick up your car? And then can you sign the forms for the other £12,000 to go into the ISA. Remember to thank Gramps.

DS
Cheers 😁

Original poster

ShoebillStork · 21/06/2021 17:28

Happy Birthday Son I put some money from Gramps in Premium Bonds unfortunately no wins.Here's,000.

He'd get his original £10k back

OP posts:

burritofan · 21/06/2021 17:53

unsure how to calculate the amount DS would have got had I put it in a low risk investment
But you didn’t put it in a low-risk investment! You put it in the house. You can’t do A with the money but then claim B; that’s what people are trying to get through. You owe your son a specific amount, not what you’ve “decided” to give.

Honestly, my roof is literally caving in and it’s going to eat up all our “new bathroom” savings but I cannot fathom dipping into my DD’s substantial savings to fund it instead. It’s her money. I’ve got lots of jobs as a parent, from changing nappies to instilling values to cooking tea, but among the most important jobs would be not borrowing her money. The literal roof over our heads is my responsibility to pay for, not hers.

Original poster

ShoebillStork · 21/06/2021 18:08

You don't have to get anything through to me. I take your point, I disagree.

How old is your DD who is living under a roof that is caving in?

OP posts:

WobblyLondoner · 21/06/2021 18:22

Have you looked at what the increase would be if you'd invested in low risk funds like a tracker fund which is what I assume your FIL was suggesting? Bank interest rates seem irrelevant here.

I take your point about what you did with the money benefitting your son but your son would have seen a considerable increase in his pot if you'd invested it in that way and it seems to me you need to honour that.

AmaryllisNightAndDay · 21/06/2021 18:24

The pickle in the title was that I was unsure how to calculate the amount DS

Nah, the pickle is that your FiL is likely to agree with us not you, so you don't want him to find out what you did. Otherwise you'd have asked him if was OK to spend the money on the extension years ago. And you'd have agreed (with him) how much to give your DS now.

I've decided to release £15k on the mortgage.

Which hopefully wont be too far from what he would have got anyway going by the value of his share of the house.

DS will be delighted and thank his grandad profusely.

He's 18, of course he'll be delighted by that kind of sum! He wont know what he's fairly owed. That's your job to work out.

sunglassesonthetable · 21/06/2021 18:41

but among the most important jobs would be not borrowing her money. The literal roof over our heads is my responsibility to pay for, not hers.

In all honesty, truly, it would depend on how bad that roof really was I think.

I don't actually believe if there was a proper caved in roof you wouldn't use any money you could get hold of.

Thehouseofmarvels · 21/06/2021 18:41

@ShoebillStork are you going to tell FIL that the money was used for loft or will you just hand over the 15 k and hope they don't ask?

Thehouseofmarvels · 21/06/2021 18:47

Or just tell FIL it was in a junior isa? Since it will have that amount of interest he probably wouldn't find out where the money actually was if he isn't told.

Blossomtoes · 21/06/2021 18:49

@Thehouseofmarvels

Or just tell FIL it was in a junior isa? Since it will have that amount of interest he probably wouldn't find out where the money actually was if he isn't told.

That’s all right then.