Student daughter has been given £10k. What should we do with it?

[AnitaLoos]

Daughter is 19. First year of uni. Currently we (her parents) have the money in our ordinary online savings account as the donor gave it to us to give to her as and when we saw fit. Daughter would rather we saved/invested it for her than manage it herself. She is sensible with money, lives in a cheap area, works in the holidays, has other savings from her government child trust fund and gets her loans etc so doesn’t need it for day to living and hasn’t earmarked it for anything. However, I don’t think it would be wise to lock it away for years. Any thoughts? We are pretty skint so don’t have investments ourselves!

If it were my daughter under those circumstances, I’d advise her to open a stocks and shares ISA - trading 212 for example and invest it in a low cost global index fund. Something like vwrl pays a 2% dividend and long term growth has roughly been 6-7% over longer periods of time. She could leave it to grow or access whenever she needs.

option 2 would be invest some into a LISA… there’s a max amount per year, but govt will top up. Can only be withdrawn for either house purchase or pension- so be careful to look into this carefully first as if you are in an area where house prices are above average, you may be adversely affected

NatWest has a two year 6%( I seem to recall) account, which you can access if you need to

Stocks and shares need at least 5 years and you could risk losing it. I would put the money in a fixed rate ISA . Completely safe and tax free.

I would do as Mamamoon advises - yes it may lose value in the short term but you've said she doesn't need it for day to day living expenses and it's a relatively low risk way of getting exposure and experience of the markets and the world of investments at a young age which will be invaluable knowledge through her life.

She may also choose to start contributing to it - show her compound interest calculators to see how different amounts can affect compounding returns. Investing isn’t risk free, but neither are savings accounts when inflation is at play!

She is still young, but may want that money in the next 2-3 years, when she leaves uni, for a car, property deposit, gap year etc. Don’t put in a stocks and shares isa, it’s too risky for the shorter term, plus you have no investment experience. Put it in a high rate savings account.

I disagree, the earlier she starts the better. There will always be something she could be spending the money on, you have to start somewhere.