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?

Her employment does sound precarious - she sounds realistic about its prospects. I think she should carry on doing what’s she’s doing for now (she should look into bonds also) and get some one off advice on what would happen to her savings if she were to move abroad (tax position etc).

I’d advise caution on the LISA too. I think this can only be used on properties up to £450k (which will get you a flat in zones 3-4 or a very small house in the outer London zones). Or she could use it towards a pension in a LISA but then it’s tied up for a very long time. There are very punitive penalties for withdrawal. It’s not that flexible. My dc have decided against one for that reason at the moment as they figure that, if they buy as a couple, both earning £40k with a £100k deposit, they’d be looking at getting a property worth £500k or slightly above.

For goodness sake. Just stop with this nonsense. OP doesn't need to read the room. People are allowed to ask for advice about financial matters. It is pathetic that certain posters try and shut down any conversation about money with the immature responses like read the room or being tone deaf.

I would suggest

Continue paying into work place pension

Pay Into a LISA -Government adds free money

Put 20k per year into an ISA - tax free

Spend some on holidays while young & free

Property prices historically increase over time

Then just leave her to it. It doesn't make sense that she doesn't want advice because she has no plans to invest, but yet she comes to you because she wants advice.

I think she is doing ok how she is. I’d get her to look at her saving and see how she can improve them but renting and waiting to see what happens isn’t a bad plan. I know everyone hates the thought of giving money to landlords but buying a property is a big commitment so it can be better to wait and make sure you are buying in the right place. Also, waiting to buy might mean she ends up being able to buy a bigger property that she is likely to live on longer rather than a starter home.

She's a grown adult pushing 30 who earns a lot of money and has a pension, savings, stocks etc. Not sure what there is to be 'concerned' about.

If your biggest worry about your adult child is 'they've got too much money' then honestly, I think you can put your feet up and chill instead of getting your knickers in a twist because they're not buying a house yet.

In fairness, if the initial post had been worded differently there would probably be more advice and less sniping. When I clicked on ‘Concerned about my DD financial position’ I assumed it would relate to being in serious debt. The original post is not neutrally asking for financial advice it continues to express worry about the situation.

I don’t know why it’s immature to say something is tone deaf. If the answer is ‘yes’ to the question ‘would most people like to have this problem’ it’s probably sensible to not make out that it’s a source of worry on a public forum is it, because of course people are going to be snarky!

I guess this is AIBU but I don’t know why so many posters have to be so snide. There is nothing wrong with telling the OP that she shouldn’t worry but there is no need to be unpleasant about it unless you are the type of person that gets a kick out of behaving like that. It’s pathetic.

A perfectly sensible thing to do is to put it in highest interest savings accounts can find (mix if fixed term, restricted access and instant access) and accrue it for a while.

Might be worth putting a smaller portion each month into a tracker type fund with a view to it being for longer term and main savings kept as cash for the shorter term.

For DD it’s not even just the what ifs. She’s 27, has lived in London for almost a decade and still moves to a new area every 2 years with her friend. She said she doesn’t know where she wants to buy and doesn’t want to commit to somewhere just because she can. She also wants the flexibility to take a sabbatical, moved abroad etc. at very short notice. Her industry does realistically mean she could get a call from a recruiter in another country and have 3 months to move her entire life.

Tell her to watch Rebel Finance School on YouTube. 10 videos that she can work through.
The Donegans are a couple in their 40’s who are financially independent and advise people where they could invest.

She really doesn't need to pay an IFA.

Are you the same mum who was worried that your daughter goes away a lot but doesn't always inform you of where shes going? Doing dangerous sports?
And now youre worried shes got more money than what she knows to do with?
In which case, worry less and just let her get on with it.

When I read ‘concerned about dd financial position’ I thought that she was going to be in £££££ of debt with no job, unstable housing and 6 kids!!!

the latter sans doute!

Please don't tell me Slothfully that you thought the OP was genuine? A (if I may say) beautifully crafted parody! A joy to digest, from 'would be a whole house in the rest of the country' to the super rich getting super richer and entry-level luxury becoming more budget conscious 😆. Bravo!

To be honest @HamptonPlace I take every post at face value. If they're trolls, it's no skin off my nose - I'm here for a chat.

The vitriol spoils threads though.

You say she isn’t investing but fills her stocks and shares isa every years and has her 12% contributions matched by her employer. So she is investing 20k a year into the stock exchange plus 24% of her large salary. On what planet is that not investing?

Her worst financial move is to keep renting if she doesn’t really have to. But it’s her choice and if that’s what she wants then sure, she can keep renting and having fun with her friend. I don’t see a problem really. It makes sense to choose very safe investments for now. She has thought it through and she can change something when she’s good and ready.

Oh shut up.

She is only in her 20s, has a well paid job, maxing out ISA's and saving to buy a home. She has done her own research and decided investing isn't the right option for her. She is enjoying life with lots of travelling.
I struggle to see what you are worried about? She is in a better position than the vast majority of people her age. She sounds very sensible and independent, not like someone who needs their parents to make their financial decisions for them.

HL active savings or interactive investor or raisin platform all have fixed term bonds 1-5 years, divvy up into the max amount covered per bank by the compensation scheme. Tie it up sooner rather than later as interest rates are meant to go down. She can still get 4 per cent or more tied up. If she has 500k at 4% that is 20k a year interest. She will have to declare it on a tax form and pay tax at her marginal interest rate plus 2 per cent going forward. However, you pay during the tax year you receive the actual interest. So she can tie it up to receive it when it suits her. It is all very easy to do and open online.

I agree it makes no sense to buy a flat and pay stamp duty to then have to buy a house later and pay stamp duty again and potentially sit on a flat, as values on flats in London have been going down. To me, she is doing all the right things, travelling whilst she still can, still saving into a pension etc she seems to be doing extremely well. Well done to your DD.

She may have done her own research but she hasn’t reached any conclusions. She needs to see a financial advisor as others have said.

You poor thing. It's such a worry when our kids are in these dire situations 🙄