what to do with £80k for DD when she turns 18

[shreddies]

I know we are incredibly lucky to have this problem. DD was left money by a relative, and when she is 18 it will come to her. It is currently in a trust.

I would really love her to leave it and let it grow so that when she is ready to buy a property there is more there. Ideally I'd like it to stay invested and in a trust, but I imagine that is quite an expensive way to go about managing it. What are our options here?

Very grateful for any advice

Speak to a financial advisor

And be sure to have your daughter come along.

She's quite likely to want to access some of the money when she turns 18, perhaps to travel or live abroad for a while, possibly before going to college or university.
Could you see your way to helping her do that (while keeping the bulk of the funds secure for her future? It may be possible, it depends on how the trust is set up and operated.) Or she might agree to do this anyway.
The trouble is, at 18, many youngg men and women are not that invested in buying a property at some unspecified time in the future and releasing a small part of the legacy for her at that point might help her to hang into the rest of the capital.

please dont let her access the money. My grandmother left me some money in trust. By i’m 18 i blow it for porsche 😢😢😢 18 years old me was so stupid. Now i realise its better in i put it for house deposit 😢

There are options for relatively straightforward investing without extortionate fees - DH works for Santander (although no where near the investment area) and we use their investment hub. Seems easy enough and with a similar amount to invest, we read up on different funds, compared risk profiles and then spread money across 10 different funds. We check them occasionally and moved some stuff based on money podcasts he'd been listening to but otherwise they're doing well - just reviewed actually and even with the Truss crash / war / COL have delivered over 9% growth

Oh god!

I wondered if it was too small an amount for an IFA. A tracker in an ISA seems to be possibly the most sensible thing to do, I just don't really know where to start

@Femme2804 it is the DD’s money, her parents can’t stop her spending it if she wants to, they can only advise. Doesn’t mean she will listen

Money left to her is hers. She can do whatever she likes with it. What you need to focus on is giving her the financial savvy to make the right decisions at 18. In my experience that means giving her some money to blow now so she can learn her lesson and move on. I’d probably give her £1,000 as a test to see what ahe doesn’t with it.

I don’t have any sage advice on stopping her wasting the money, but if you’re looking for easy ways to invest it I’d recommend the Fidelity investment platform. You can save it in stocks & shares (moving it into ISAs over a couple of years) and they have lots of different funds/trackers in a very easy to use format.

I would suggest £20k in a stocks and shares ISA, £2,880 to start a pension (more if she’s working), maybe some in a lifetime ISA (where she can get tax relief and save for a property). I’d see if she wants to blow £5 or £10k and maybe put the rest in premium bonds for fun and slowly move £20k a year to the ISA.

Not all 18 years would have blown 80k. I worked at 18 and went to college. I was sensible at that age but tbh I was a sensible kid om general.

What's your DD like OP?

She's very sensible and I think will be quite anxious about what best to do with it. So I don't want to overwhelm her.

Some money for fun is a good idea. I think she would like to buy equipment for her (expensive) hobby that she couldn't otherwise afford. She's a bit of a homebody, not really into clothes or going out

I think that if the money becomes hers when she turns 18, then the idea of keeping it in a trust may not be very practical. You would be asking her to resign control of her own money and hand it over to someone else (who? for how long? And in fact why? - because if she's the kind of person who would choose to do this, then she's not the kind of person who's going to blow the lot on frivolous crap anyway.). There is nothing to stop her from investing it wisely in her own right, and she sounds like a sensible person.

Just as a general piece of information (not for OP, but for others who may read this thread): when you put money in trust for a young relative, you can make the age at which they gain control of the money anything you like. It doesn't have to be 18. For our kids it's 25, and for others it could be 30 or older. You can give the trustees the power to use the money at their discretion for the benefit of the young person before that age (e.g. for uni fees, or just to hand over as cash if they think it wise). Not all 18 year olds are ready for a big lump of cash, although some are. I'm sure most people already know this, but just thought I'd mention it.

At 18 I would definitely have saved the money for a deposit. In fact, my grandmother had saved the money to pay for a wedding but I put it towards a deposit on a house. I would ask what are her plans? If she is going to travel and/ or go to university, then talk to her about using some of it for that and making her life a little easer and then saving the rest. but it needs to be her decision so sit with her and a financial adviser.

It's good that she's sensible. As pp has said, it's hers to access when she is 18, you (legally) can't and shouldn't try to limit this. You just have to advise and bring her up to be financially savvy.

I'm in a similar position with my DD who unfortunately is a bit of a natural spendthrift, so I do worry. To an extent I'm pragmatic and have had to accept in my mind that the person who left the money to her was the one who made the decision and if dd blows it, so be it. I wish the will-maker had specified a trust until she was at least 21 though!

She should put 4k in a LISA as it’s 25% interest and can only be used for a house or retirement. Then the rest in ISA’s and also high interest accounts tied up for a year and then move the max allowance in to the ISA next year.

But it’s down to her really.

My family were poor but two of us siblings, different Father to all our much older siblings so they got nothing were gifted 1k in 1981. That was a very handy building block added to money I had already saved. My sister blew the lot, it’s the pattern of our life. Raised the same as was DH and his sister and she is just the same as my sister.

I would max out isa's, savings bonds are another option if you can get a decent rate, but have a set amount available for driving lessons, a gap year holiday etc that can accessed at 18

Don't bother with a financial advisor - the amount is too small. Go into Money to the Masses and have a look - loads of info and help. Or just open a Vanguard account, choose a fund and stick it in there.

Thanks so much, really helpful advice, I'm very grateful

Of course you should try to limit her access to it, she's barely more than a kid! What's she going to do to the OP, take her to court! She might want a small chunk for travelling or driving lessons/car which is reasonable but then I'd be clear that the best thing to do with it is put it away for a house deposit. Don't let her use it for uni unless she needs to top up her loan because she doesn't get the full amount and you can't top up. If she has free access to it all through uni there is every chance it will disappear and she won't even know what on.

I wouldn't bother with a financial advisor for that amount but put 4k in a LISA definitely, Skipton do one that we've set up for DS. Max out ISA's and then look at high interest savings accounts fixed for a year (or more).

Stocks and shares ISA, 20K per year

Vanguard lifestrategy 100
Vanguard FTSE Global All Cap
Any FTSE All World Index tracker

If she's generally sensible, the best thing to do will be to start talking to her about options well in advance so by the time the money comes through she has a plan.

My suggestion would be to take 10% out for 'fun' money. Keep that as cash in a savings account with relatively easy access but a good rate of interest. Ideally one of the ones that gives a better rate if you make no more than 3 withdrawals a year - that way she can spend what she wants, but has an incentive to think a bit about purchases and use it for big ticket items she'll notice the value of rather than fritter it on bits and pieces.

Then work out a reasonable budget for university (if she wants to go). Not enought to live in luxury, but essential spending. Keep that in cash as well, in a series of 1-, 2- and 3-year fixed term accounts.

The rest, divide between LISA (£4k a year), ISA (the remaining £16k of the ISA allowance each year), and pension (£2880 a year or more if she's earning). Even a small amount in a pension at 18 will be hugely valuable by the time she can access it.

40K into a premium bond account (will earn about 2.55% tax free and safe and instant access)
20K into a stocks and shares ISA (make sure fee is low)
4K into a LISA (plus 25% from Government so 5K saved for first property up to 450K)
6K into a SIPP to build for her retirement.
10K guilt free fun spending money
Year 2 she can consider taking more out of PB account to put into SSISA or LISA etc as she will have a new allowance for the year.
Best of luck to her OP its a wonderful start in life and she can really make it grow considerably over time.