Where would you invest 14yo's £100k inheritance

[StiffyByngsDogBartholomew]

Dd has inherited just over £100k from my uncle. Solicitors are happy for it to be paid over to us and I will be managing it and the only one able to access it.
I will be looking at 85k in a high interest account or maybe bond but I am prepared to consider something a little riskier with the remaining £15k. Dd will be allowed £1000 per annum of the interest as we enjoy cultural travels together and this will help fund that or anything else significant she might want (eg PADI certification she wants to do). I want her to be able to enjoy a little bit of it now. That money would just go in her regular Yorkshire building society account and if she doesn't use it she will get 4%
it needs to remain as a two signatory account until she purchases her first house as this is what it is for and I want ti make sure she cannot access it.

Please be aware that unless you pop it in a JISA* or similar*, then any interest earnt from a regular savings account will be treated as yours and taxed accordingly.

I'd be cautious about using a Lisa if your dd is at all likely to end up in an expensive area for housing.

Some good advice on this thread. Biggest issue is that a savings account is a really bad idea. As PP have said the interest will be taxed and the after-tax yield is unlikely to keep up with inflation. So a great way to lose money. At this time horizon it should be invested, probably mostly in equities. And you should be putting as much of it in a tax-advantaged account as you can.

The second issue is that, unless the uncle specified in his will that the money is to be held in trust until DD is 25, I don’t see how you can prevent her getting access at 18. So you need to have a conversation with her about appropriate management strategies in advance of that.

Honestly I think you should see an IFA. Ask for one off advice rather than ongoing management. This stuff is fairly complex and your answers above suggest you’re not super experienced at it, so £500 to draw up a proper plan would be money well spent.

That's what my uncle wanted her to do with it

4% interest on £100,000 is £4K. Making £1k per annum perfectly doable.

I think given all the advice and conflicting opinions I will book an appointment with my parents' IFA !

I don't want her to be able to access the money at 18. We all know how foolish one can be at that age and she is very generous; she would be quite easily taken in by a boyfriend that parted her from a lot of it. So I want to protect her from that. I don't care if that makes me controlling, that's why lots of estates are left in trust until the recipient is 25.

thankyou to all that have advised, I think it's just confirmed I need specialised advice, I also will be looking to add around the same amount when my parents die as long as their property isn't used fir care fees.

@StiffyByngsDogBartholomew But you will be taxed on that also. If you are a higher rate tax payer then that £100k isn't going to grow by much.

This. It’s quite a lot of money so I’d ask a professional what to do.

She’s 14 I doubt she’s a higher rate tax payer

"it needs to remain as a two signatory account until she purchases her first house as this is what it is for and I want ti make sure she cannot access it."

It's her money. If she want it she can have it at 18 (or before under certain circumstances). The only way you can ensure it is only used for a specific purpose and she doesn't have access to it is to put it into a trust and even then she will have full access at age 25.

@MisoSalmonForLunch you are dead right and I want to maximise the money for DD's future so that she can spend her life doing a job that makes her happy not a job she doesn't enjoy simply to pay the mortgage. We live in the south east so housing is v expensive. The money is enough that it will give her a fantastic start in life but not so much I can afford to be cavalier about it.

she's already said she wants to use it for a house but it's easy to be led astray in your young adulthood. I blew through loads of money which I bitterly regret.

You cannot legally prevent her from taking control of the money when she turns 18.
If the money is held in your name, interest will be taxed as your income, so if it gains £4K interest a year you’d end up with a tax bill of a minimum of 20%

@Marnie76 Interest on children's regular savings accounts is treated as the adults and taxed accordingly.

Is that not just when the parents have contributed though rather than other relatives (an uncle in this case)?

I'd be wary of a LISA if you live in the south east. It can only be used on houses up to £450k. I assume that linit will increase over time, but I suspect it will still be out of sync with house prices in the SE. And if she can't use it for a house purchase, the only way she can access that money penalty free is to wait til she's 60.

If you're putting £100k away for 10-12 years, just leaving it in a basic 4% savings account is a complete waste. I'd put £20k a year in a stocks and shares ISA for a start. And an IFA or, frankly, an afternoon of dedicated Googling, will tell you what to do with the rest.

Depends on the terms of the bequest. OP says it's the uncle's wish for the account to be protected until the first house purchase (which is presumably what he wanted to help with).

Frankly its utter madness to leave such a large sum to a child and not put similar protections in place. 18 year olds can be sensible but they can also be foolish and exploited.

An interest bearing account might appear risk-free but compare it to the long-run returns on a S& P or global index tracker and the opportunity cost may change your mind about what represents the lower-risk option for investing, given the age of the beneficiary.

Well quite - which is exactly what trusts are for. A dual signatory bank account will absolutely not stop an 18 year old accessing her money.

Would it be best to seek proper financial advice from an advisor or accountant
That's a huge sum of money

1k out of 100k is 1%, not 10%

Yes that was my understanding @Marnie76. If deposits are from the parents then interest over £100 is treated and taxed as though it was the parents. But I don't think that's the case if the money comes from elsewhere?

But I'm in Government finance and not personal finance so glad you are getting specialist advice op.

I agree with spreading it differently. Speak to friends and colleagues for names of good financial advisors. Someone, somewhere, will have one.

When I was 5, my granddad died and left me £5k (the equivalent of £15k in today's money).

My dad had an IFA friend who invested it on my behalf in various investment funds (I am 45 now and still have some of them with Threadneedle).

By the time I was 20 and wanted to use some for my first house, it had risen to £25k (the equivalent of £50k in today's money and 5x in real terms).

Earning interest on it alone isn't going to grow the value, especially as bank accounts don't appreciate in terms of inflation. That £5k I had back in 1984 would still be £5k today if I had spent all the interest that had been earned in a bank account.

😅😅😅 so it is
this is what a baby teething with a dash of sleep regression will do to your brain 🥴

apols OP

Will money be needed to help with Uni fees?
Only go to IFA that are recommended by someone reliable. Two firms have featured in Newspapers for having expensive management fees, google whoever is mentioned.

https://www.unbiased.co.uk/discover/personal-finance/savings-investing/who-are-the-10-best-uk-wealth-management-firms-in-the-uk

I know a couple of people with St James Place and they have been inordinately impressed with both the returns and the financial advice. Fees are high though so worth shopping around. I'd make virtual appointments with a couple and see how it goes.