Concerned about DDs financial position

[Clinkanddink]

Long story short without being too identifying ideally, my DD is in her late 20s, she earns an amount that most would class as a high earner, lives in a flat share, is paying a high amount into her pension (12%, employer matched), has a significant amount of savings in a low interest savings account (from inheriting her grandparents property as they decided to skip a generation for various reasons), she maxes out her stocks and shares ISA every year but this is the extent of her investments.

Today she came to me for advice. She told me was feeling a little worried as she isn’t doing much with the money she has her reasons were as follows
She is likely to buy in the next 5 years and need the money for a deposit (London living so while it would buy a family home outright in much of the country or a flat in many parts of London, it’s likely to be used as a deposit by her) so doesn’t want to invest incase it loses value and her research suggested any money needed in 5 years or less shouldn’t be invested as it’s not long enough for any market dips to recover.
She doesn’t want a buy to let as she feels it ties her down, and the new renter reforms scare her.
She doesn’t want to buy now and get a lodger as she likes the flexibility of renting and is undecided on if she will move abroad.

Basically she has a lot of money doing not a lot and every month that amount grows as she earns significantly more than she spends.

She seems extremely reluctant to change any of this and frankly I’ve never been in her situation so don’t know how to advise. She said “I feel like I have money right now, that I haven’t matured enough to use”.

Im now worried she is effectively losing money due to inflation and will realise when the time to buy does come she doesn’t have the spending power she hoped she would.

AIBU to be concerned by this? Does anyone have any advice?

I would advise her to get an ISA or similar. Or pay for some professional financial advice.

Wasteful on so many levels. Poor girl. Needs a rude awakening in my book.

Tell her to speak to a financial advisor.

Surely it’s obvious she needs to go to a financial advisor.

Tell her to speak to an independent financial advisor who can discuss other investments other than the ISAs with her.

you don’t need to be worried at all - she’s in an enviable and very rare position, and she sounds like she’s also being very sensible with her money too.

Does she ever take a nice holiday or have a weekend away? As well as investing sensibly, she should also enjoy it a bit becuse if she goes on to have kids etc there will be whole decades where she’s spending a high amount on outgoing (mortgage, childcare etc) and will have zero freedom to actually do anything with it.

She travels loads but this is mostly on salary and bonus. This year alone she’s left the country at least once month.

Is there a reason she can't contact a financial advisor?

Why do so many people think they are oh so funny by being an arse to a concerned parent?

Well she can, she doesn’t want to. She claims she’s done her own research and there is no point as she doesn’t plan to invest it.

Your story doesn’t really add up. She’s done her own research - good for her! - and she doesn’t want to change anything. So why would she have come to you for advice and say she is “a little worried”?

I’d be more concerned about her carbon footprint than her finances, how excessive.

She’s a grown woman who sounds very capable. It’s natural for you to worry, but you really have no need to and would do better to leave her to it.

Yes I agree, it is a lot but her job requires travel and her key hobbies require travel (board sports such as wakeboarding, snowboarding and surfing).

I think that if she plans to buy in the next 5 years, what she is doing with the money is absolutely fine.

Investing could well increase the overall value, but comes with the risk of losing some of it too. And realistically, by the time you’ve paid for decent financial advice (which she would need to invest if she is new to this) then she’s probably not going to see a huge return.

In your position I would suggest that she thinks about buying sooner rather than later. No hurry to do it straight away but property, especially London property, is a good investment and there is a huge value to having a mortgage in place well before you start having kids, going part time etc. Overpaying on a mortgage saves you a lot of money!

The second thing I would suggest would be looking at fixed rate bonds for the money in the savings account. These are still cash savings so extremely low risk. But you effectively promise not to touch the money for eg 3 years and in return you get a higher interest rate.

Id also encourage her to see this idea if having the money before she is ready for it as a positive one. It means she sets the timescale with no pressure. Rather than circumstances setting the timescale. She sounds lovely and very responsible.

She needs to compromise vis a vis her property choices, stop renting and buy a flat. She can have a flatmate paying her rent if she's sharing already.

Thank you! I’ll let her know about fixed rate bonds.

She is very reluctant to buy in London right now as in her career London isn’t actually a major player, most of her lateral or vertical career moves would involve moving abroad. While she is happy in her job right now and does see a world where she stays in this job for 5-8 years and then hops to an adjacent industry, she is also hyper aware that at any moment her decision could change by choice or force.
Her biggest fear is that her company is in the “entry level luxury” area, which she feels will be pinched the most as those who go luxury are only getting richer and those who tend to go for mid-level or entry level luxury will be forced to tighten their belt and be more budget conscious. It’s a small relatively new company and she is terrified it will fail and moving abroad may be the only option.

She is currently living with her best friend and wants to continue doing so. Neither want to buy and have the other rent as they both have the ability to buy themselves. They also don’t want to buy together as one may need out long before the other is ready to sell and it could get messy and damage the friendship.

She could consider property ETFs? Something like that would move with the property market to some extent.

Not financial advice but ask her if she knows about them. Or if she wants to go extremely low risk something like a fixed term saver. Low risk, will be low reward though obviously. But definitely NOT financial advice!!

I’m confused, she’s done her research and therefore doesn’t need an independent financial advisor but she’s seeking the advice from her unqualified mother who in turn, seeks the unqualified advice of internet randoms on a relationship advice reform.

My advice, leave her to it.

Ask her to look at the Rebel Finance school and then decide.

She's confident enough in her own research that she doesn't need a professional financial advisor but she's coming to her unqualified mother for advice, and you're concerned about her finances because she's earning well and saving each month, while also jetting around the world every few weeks for her expensive hobbies?

This is either a big fat humble-brag or just the old classic cost of living rage bait.

"entry level luxury"! It's another world, it really is.

The best place for advice about this is probably the subreddit r/HENRYfinance (high earner, not yet rich) on Reddit: https://www.reddit.com/r/HENRYfinance/s/sVGslBOnh7 - it’s super active and a lot of the contributors are people who are or have been in your daughter’s situation. Plus, because it’s a community catered specifically towards that demographic, it’s less likely to give rise to comments about this being insensitive to post during a cost of living crisis.

Whilst the advice she’ll get there isn’t professional advice, given she’s been able to get a high paying job in her 20s she’s probably able to work out what advice is useful to her and what isn’t. Even if she doesn’t ask about her own situation, reading about the financial dilemmas of people in the same position as her might prove useful.

She needs to make independent decisions rather than rely on what her flatmate is doing. It is not a good reason enough reason not to do something because her bestie isn't doing it.