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Original poster

Teens/young adults inheriting 10k

42 replies

allhailraatma · 25/01/2023 07:56

As the title says. They are early 20s and 16. All in full time education (school,undergraduate, masters). They are inheriting 10k each. What should they do with it? The plan so far for each of them
1 - wants to invest for a year or so
2 - wants to use some to upgrade her uni accommodation (and will blow the rest on living the good life if she's not gently guided!)
3 - wants to have a few hundred to spend on stuff. Was thinking about putting a chunk into his CTF (he's 16)

They'd all like to buy something small to remember the person who left it to them and apart from that I'm a bit clueless. Thank you!

OP posts:
GoldilockMom · 25/01/2023 07:58

I would suggest they use the LISA schemes and put in as much as they want so the government pay them an extra 25%
They should have some spends -

Original poster
allhailraatma · 25/01/2023 08:01

I think a LISA might be too long term for them but I agree it's a sensible decision

OP posts:
nzeire · 25/01/2023 08:03

id hate to see that money frittered away. Myself and children save hard so they can have 10,000 (nz$ not quids) when they turn 18, one already has it.
it’s for big stuff, overseas trips, big festivals, car if needed… one child super sensible, is using part for a big Europe trip the other I’ll probably hold onto until they need it for a big ticket item. Otherwise it will be eaten and drunk
it was loosely the agreeement, I think my contribution has been about 70% so I do have a bit of an opinion on it!

Riverlee · 25/01/2023 08:05

I think a combination of spending and saving would be the best option.

Spending could be new Xbox, Apple Watch, or upgraded uni accommodation.

Maybe suggest to uni student to save half so she’ll have some money towards to a deposit.

Original poster
allhailraatma · 25/01/2023 08:05

None of them want to fritter it away. Two of them are over 18 so it's literally their adult money and they'd like some guidance.

OP posts:
lifeinthehills · 25/01/2023 08:08

It really depends on their individual circumstances. I think it would be nice for them to get something they will just enjoy 'because', but using it to advance their position in life (or most of it) is probably the sensible option. If they don't know, put it in the bank and collect interest for now.

ArcticSkewer · 25/01/2023 08:12

Lifetime isa 4k this year and 4k after April.

2k to be divided up ... maybe something on a special item or memory and the rest as general spends.

They may be 18 but one day they will ask why you let them fritter it on an ensuite uni room!

Heavenisafigroll · 25/01/2023 08:12

I would suggest that all of the DC save 65% - have a look at LISAs.

Then put the rest in an easily accessible savings account.

And explain to them that to have been given that amount of money after tax represents actually a lot more in hard won earnings so to take care with it!

And I would tell no.2 that if she can possibly hang on in current uni accommodation, the money would be much better spent on the deposit for a flat once she is earning. It's a badge of honour to survive crummy uni digs! No one cares that they are crummy. Later on it's less desirable to live in squalor! 😀

backinthebox · 25/01/2023 08:14

I would stick £8k in a LISA (£4k this tax year, £4k next tax year.) Each £4k will gain an extra free £1k, meaning their £8k becomes £10k again automatically. Then have the remaining £2k for ‘nice stuff.’ Free money, and a bit of nice stuff is not to be sniffed at at that age.

Heavenisafigroll · 25/01/2023 08:15

backinthebox · 25/01/2023 08:14

I would stick £8k in a LISA (£4k this tax year, £4k next tax year.) Each £4k will gain an extra free £1k, meaning their £8k becomes £10k again automatically. Then have the remaining £2k for ‘nice stuff.’ Free money, and a bit of nice stuff is not to be sniffed at at that age.

^^ this is excellent advice!

Littlegoth · 25/01/2023 08:15

Spent part of an inheritance on upgrading to an en-suite uni room, and a small fridge for my room and no regrets whatsoever.

The other blocks used to come in and prank us, stealing loo roll, and once they took all the shower curtains. Stopped my food going missing too.

Heavenisafigroll · 25/01/2023 08:16

And from ArticSkewer also excellent post!

ChatTilMidnight · 25/01/2023 08:28

Agree with £4k in a LISA now and £4k after April so that still leaves them £2k. Hard when they are over 18 but I think I would get the child who is likely to blow it to put it in writing why they want to spend that money on good living so they can see their decision and then refer back to it later when they are thinking house deposit which will be the hardest thing to save for.

How much would an accommodation upgrade cost? Is it truly worth it? I did it for my final year, had 3rd year campus accommodation with an en-suite as it meant I was on campus so close to lectures, library etc and no longer had a 25 minute walk in all sorts of weather. So it wasn't just about an en-suite but commute time too.

Chevyimpala67 · 25/01/2023 08:41

Save half

Spend half

I'd suggest an isa if they don't already have one

Itisbetter · 25/01/2023 08:44

Driving and first cars if they don’t have that done yet. If they do, put it in a savings account and save it for later.

Crimsonripple · 25/01/2023 08:49

Stick in a premium bond account. Likely win with a 10k investment.

backinthebox · 25/01/2023 09:28

Crimsonripple · 25/01/2023 08:49

Stick in a premium bond account. Likely win with a 10k investment.

Terrible advice.

  1. it is unlikely to win £2k instantly, but a LISA will accumulate that by default.
  2. it can be easily accessed so is easier to fritter away.
  3. money tied into a longer term investment will accumulate interest closer to the rate of inflation. £10k in premium bonds is much less likely to do this, and over the years their money will become worth much less in the real world, if they haven’t already spent it by then.

Premium Bonds are for when you have a lot already in solid investments and need to keep some cash liquid whilst wanting a bit of a chance of increasing its value. But the emphasis should be put on ‘chance’ here - for every winner in PBS, there are people getting nothing at all on them and when inflation is rattling along at over 10% that money will devalue very quickly indeed.

backinthebox · 25/01/2023 09:32

To flesh it out with some numbers, I have £30k in Premium Bonds. They’ve won me £500 in 2 years. This is nowhere near the £2k certainty the opening of a LISA would gain. I’ve got my money in PBs because I maxed out my ISA allowance (and that of my kids) already this year.

Original poster
allhailraatma · 25/01/2023 09:39

ArcticSkewer · 25/01/2023 08:12

Lifetime isa 4k this year and 4k after April.

2k to be divided up ... maybe something on a special item or memory and the rest as general spends.

They may be 18 but one day they will ask why you let them fritter it on an ensuite uni room!

If only. She still won't get an ensuite even with a top up from her own money. Second year accommodation is a yearly contract at 200 a week and that's pretty standard for the city she is in. Thats almost 10k, so all her maintenance loan and then some leaving nothing for living expenses. We already give her 4k a year and cannot afford more. It's been a huge weight off her mind that she can live with her friends in a non-shithole near the uni. Yes, she could have lived miles out and commuted in on her own but now she doesn't have to. I don't think she'll regret it at all, she thinks of it as a gift from her relative.

OP posts:
Original poster
allhailraatma · 25/01/2023 09:40

backinthebox · 25/01/2023 09:32

To flesh it out with some numbers, I have £30k in Premium Bonds. They’ve won me £500 in 2 years. This is nowhere near the £2k certainty the opening of a LISA would gain. I’ve got my money in PBs because I maxed out my ISA allowance (and that of my kids) already this year.

Thanks - they already have 3k in premium bonds and have won nothing for years, the odd £25 before that so I doubt that's what they will want to do.

OP posts:
Original poster
allhailraatma · 25/01/2023 09:42

Itisbetter · 25/01/2023 08:44

Driving and first cars if they don’t have that done yet. If they do, put it in a savings account and save it for later.

Actually this is a good idea for teen 3. We live rurally so cars are essential.

OP posts:
Original poster
allhailraatma · 25/01/2023 09:43

ChatTilMidnight · 25/01/2023 08:28

Agree with £4k in a LISA now and £4k after April so that still leaves them £2k. Hard when they are over 18 but I think I would get the child who is likely to blow it to put it in writing why they want to spend that money on good living so they can see their decision and then refer back to it later when they are thinking house deposit which will be the hardest thing to save for.

How much would an accommodation upgrade cost? Is it truly worth it? I did it for my final year, had 3rd year campus accommodation with an en-suite as it meant I was on campus so close to lectures, library etc and no longer had a 25 minute walk in all sorts of weather. So it wasn't just about an en-suite but commute time too.

Yes it is worth it for her.

OP posts:
Original poster
allhailraatma · 25/01/2023 09:46

Heavenisafigroll · 25/01/2023 08:12

I would suggest that all of the DC save 65% - have a look at LISAs.

Then put the rest in an easily accessible savings account.

And explain to them that to have been given that amount of money after tax represents actually a lot more in hard won earnings so to take care with it!

And I would tell no.2 that if she can possibly hang on in current uni accommodation, the money would be much better spent on the deposit for a flat once she is earning. It's a badge of honour to survive crummy uni digs! No one cares that they are crummy. Later on it's less desirable to live in squalor! 😀

She's already spent the first year in the most shite and cheapest accommodation - definitely not an ensuite and won't get an ensuite next year either! She's been fine with it but now sees a way of living with her good friends in a nice house near the university so easily walkable. She's in a very expensive city and second and third year accommodation is very expensive and scarce. It's definitely not the most expensive and swanky either!

OP posts:
Original poster
allhailraatma · 25/01/2023 09:47

backinthebox · 25/01/2023 08:14

I would stick £8k in a LISA (£4k this tax year, £4k next tax year.) Each £4k will gain an extra free £1k, meaning their £8k becomes £10k again automatically. Then have the remaining £2k for ‘nice stuff.’ Free money, and a bit of nice stuff is not to be sniffed at at that age.

This is what dc1 will do I think, thank you.

OP posts:
WhatACarrieon · 25/01/2023 09:53

backinthebox · 25/01/2023 08:14

I would stick £8k in a LISA (£4k this tax year, £4k next tax year.) Each £4k will gain an extra free £1k, meaning their £8k becomes £10k again automatically. Then have the remaining £2k for ‘nice stuff.’ Free money, and a bit of nice stuff is not to be sniffed at at that age.

If this is doable, then this is excellent. They will enjoy the new iPhone / Apple Watch / Xbox / Ibiza holiday (I was AMAZED how much that cost my 21yr old niece) / runaround car if its actually free - AND you've taught them the benefits of sensible (tax aware) investing right from the start. That's something that will serve them well in life, if they make decisions fully aware of all the options.