Investment for kids

[markm]

Our endowment comes out this month (we changed to repayment but we were advised to keep the endowment going - and it’s done reasonably well over the 25 years). 
 

We are going to split it between the kids for a house deposit each. Neither are looking, youngest is 16. Its around £20k each, although that’s just a guide, waiting for the cheque amount on that day. 
 

We want low (near 0) risk that can easily be taken out, when needed. They both have quite a few premium bonds and win regularly (between £25-£500 through the years) already and have auto re-investment. 
 

Bank account are a waste of time, although that may change with the interest rates…..

I know I can (and will) speak to an expert but have no idea what to look at and any independent advice would be welcome. 
 

 

Edited August 12, 2022 by markm

[enfieldspares]

Taken out when needed can be zero risk wit possibly no return or low return or high return (such as Premium Bonds) or (can be) high risk in the case of gold coins. If buying gold coins best to keep them at home and NOT one of these businesses that offers to "hold" the coins for you. My personal advice is seek advice via your bank.

You can gift only a certain amount each year tax free (£3000) so, again, please, seek professional advice. I'd even consider, maybe, using that money to gift them the "seed" for a pension fund for them. Releasing to it say £1000 a year each from a £40000 that you hold as a Premium Bond. 

That way you keep control of the money, it is zero risk and seeding that pension fund at an age as early as sixteen will give them a good start AND be affordable for them to them fund themselves when they start work. You might also such is the size of the Premium Bond holding win every year the same in prizes as you'd get in interest anyway.

Edited August 12, 2022 by enfieldspares

[Spr1985]

Stocks and shares Isa could be an option or as Has been said above a pension fund in the form of a sipp (self invested personal pension) the S&P 500 is a decent etf to look at and averages 10% return a year if memory serves me correctly. Obviously there are risks involved and a qualified professional will be more suited to the advice that you require.

I generally invest into companies that I know from day to day life (apple, Amazon,s&p500, Bp to name a few)  and believe will continue to grow in the long term,( time in the market will always beat timing the market ) bonus points if they meet that criteria and have a decent dividend % (all dividends are re invested) 

 

but again as said above, take professional advice from someone that can show and prove there credentials

[NoBodyImportant]

I took my sons college fund and bought a old vineyard to turn into a private rifle range/ ATV park.  He will grow up shooting and riding ATVs and when he is older he can sell it or renovate the property to live on.  I figure a free place to live will put him a head in life. 

[JohnfromUK]

You need to seek professional advice because there are significant tax implications;

1. Making 'gifts' above £3K a year is potentially taxable - but there re some ways to mitigate this (7 year rule for "potentially exempt transfers' being one).
2. There are tax saving schemes (fully legal) such as ISA and SIPP which will mitigate taxation on capital gains tax and invested income which may be significant in the longer run. 
3. There are (I believe) some ISA arrangements specifically arranged to help people saving for a house deposit - open to younger savers.
4. Nothing (well almost nothing) is totally 'risk free'.

As I say - get advice from an Independant Financial Advisor, or one of the 'big name' Financial Companies.  Check any advisor is registered with the UK authority, Financial Conduct Authority (FCA).  There are also 'qualifications' such as the Chartered Financial Planner or the Certified Financial Planner qualifications.

[TIGHTCHOKE]

Nationwide and I am sure other banks have relatively low risk bonds, might be worth a look on line.

[Vince Green]

Although technically it is illegal for any unqualified person to give investment advice on here. I would point you towards Hargreaves Lansdown and the services they provide.

Some of my investments with them are returning in the region of 10% per year at the moment

[enfieldspares]

One last thing see which banks offer to young persons opening an account a "match it" scheme or similar. That is they open an account with £x and the said bank credits the account with a similar amount. Also the UK Government itself may offer something similar. As said by all thus far seek professional advice with the first point of inquiry being your bank for the details of such a person.

[Agriv8]

When my parents endowment paid out a heathy profit they took a bond out with a bank 

I don’t know how much notice they need to sell but it is also in trust to me and my two siblings I belive the bond auto renew every few years . As bonds can be traded I guess you can always sell before they mature.

it has paid out well and regularly gives enough for my parents to hire a house big enough for us 3 kids our 3 spouses 6 grand kids ( and 2 dogs - as my dad says they are better company than me ! ) this allows my parents very precious time with the grandchildren and we are now at the stage where even my 15 & 11 year old realise that we are fortunate to have em and to make the most of it.

Take your time and reading John from uk excellent post his number 3 would tick a box for me as looking at house prices and cost of living not sure me and Mrs Agriv8 and I could have got on the bottom rung of the property ladder 20 some years ago. And things are tighter now for mortgage applications.

atb Agriv8

 

[Bigbob]

We did it a bit different took a bank account out for the kids when they where born and it matured (they couldn't access it till they where 21 ) they didnt know about it and grand parents put money in . Son bought a brand new ford ranger and daughter paid a chunk of her wedding 

[Newbie to this]

2 hours ago, Bigbob said:

We did it a bit different took a bank account out for the kids when they where born and it matured (they couldn't access it till they where 21 ) they didnt know about it and grand parents put money in . Son bought a brand new ford ranger and daughter paid a chunk of her wedding 

[millrace]

Buy a house for them the rent covers the mortgage and will leave them an income in future and a bigger return if they sell in 10yrs to fund their own homes... savings account where they blow it on a car at 18 which loses money i see as pointless...thats not an investment in their future.....

Avoid anything the goverment is involved in....they dont put money in for our benefit....they always claw somethin more back....

My 2 will have a small house each when i either die or finish paying for them.....lol its a start i never had in life no cash...  bricks and mortar !! Ceen many reached a few £ that families had worked hard to put away only for kids to blow on holiday car etc.....wasted on what 18/21 yr olds thinks they need...not the future we the savers had intended it for....!!

[Mungler]

2 minutes ago, millrace said:

Buy a house for them the rent covers the mortgage and will leave them an income in future and a bigger return if they sell in 10yrs to fund their own homes... savings account where they blow it on a car at 18 which loses money i see as pointless...thats not an investment in their future.....

Avoid anything the goverment is involved in....they dont put money in for our benefit....they always claw somethin more back....

My 2 will have a small house each when i either die or finish paying for them.....lol its a start i never had in life no cash...  bricks and mortar !! Ceen many reached a few £ that families had worked hard to put away only for kids to blow on holiday car etc.....wasted on what 18/21 yr olds thinks they need...not the future we the savers had intended it for....!!

This, save that the housing market is still going mental and caution is required. I’d look at commercial property. Also it depends on your kids tax status / the rate they pay. 

I’ve been saying there’s a crash coming for about 2 years now and it’s still not arrived but it is coming sure enough. 

Whilst kids need to think about pensions, sucking money off them at a time they need it the most is going to limit their life choices ie they will need access to money now when they are young, first and foremost.

It all depends on the kids themselves but I’d have them (ie make them) read Rich Dad Poor Dad or go on a 1 day investment crash course before handing over 5 figures or above.

Long story short, until they can with every significant expenditure ask and answer the question ‘does this put money in my pocket / does this take money out of my pocket’ then I would wait until they can before parting up with the readies.

[Newbie to this]

14 minutes ago, Mungler said:

I’ve been saying there’s a crash coming for about 2 years now and it’s still not arrived but it is coming sure enough. 

It's needed, the housing market is a joke.

[Mungler]

1 hour ago, Newbie to this said:

It's needed, the housing market is a joke.

I don’t think it’s going to affect anything under £500,000 right now and we have ever increasing demand outstripping dwindling supply.

Seen a couple of houses go through work - £180k solid ex council 2-3 bed terraced house with decent sized garden. If that got bull dozed tomorrow, with current supply issues, you could not rebuild that same house for £180k.

[markm]

Thanks for the time you put into typing all. 

[eddoakley]

20 hours ago, Newbie to this said:

It's needed, the housing market is a joke.

I feel another thread coming....

I've been contemplating my position with property having recently retired and debating whether to sell now, sit on the cash and wait for the crash before buying the same sort of thing. But as you say I don't think the bottom end will see the crash yet.

It has to come soon at the top?!?

 

Edd

[Mungler]

2 hours ago, eddoakley said:

I feel another thread coming....

I've been contemplating my position with property having recently retired and debating whether to sell now, sit on the cash and wait for the crash before buying the same sort of thing. But as you say I don't think the bottom end will see the crash yet.

It has to come soon at the top?!?

 

Edd

 

Depends what you have, what it’s like (schools, location and rentability) what it owes you, and what your capital gains tax position is.

I refinanced 3 last year (50% equity in all) and fixed interest rates for 5 years. All tenanted with same original tenants and so I’d be mad to touch them. 

Also, sitting on cash in high inflation is genuinely bonkers - in high inflation money tends to head towards fixed capital assets that can’t be inflated and bricks and mortar are a good place to start. 

£100k in the bank with real world inflation at say 10% and banks paying 2% on savings, you’re down £8k in year 1.

Whilst interest rates are going up, they are still ridiculously low when viewed historically and against current inflation rates. 

A brave person would rip a large mortgage out now, fix the rate (assuming nothing is looking like getting any cheaper for at least 2 years) and then look to do something sensible with that money - what I don’t know though 😆

 

Edited August 14, 2022 by Mungler

[ditchman]

buy a laundrette..........all cash....its where people go when they havt got a lot of money

[Mungler]

39 minutes ago, ditchman said:

buy a laundrette..........all cash....its where people go when they havt got a lot of money

In my town, the longest standing / serving shop is a coin operated launderette - little gold mine. It’s the washing double duvets, dog beds and service cleaned wedding dresses - constant trickle.

[ditchman]

44 minutes ago, Mungler said:

In my town, the longest standing / serving shop is a coin operated launderette - little gold mine. It’s the washing double duvets, dog beds and service cleaned wedding dresses - constant trickle.

if i had my time again i would buy a property and turn it into a social focuspoint laundrette....serve really nice fresh coffee...fresh danish pastries....then there would be a couple of ladys in the back doing ironing and pressing and bagging up...couple of slot machines

open 24 hrs/day.....

what do you rekon ?

[Mungler]

39 minutes ago, ditchman said:

if i had my time again i would buy a property and turn it into a social focuspoint laundrette....serve really nice fresh coffee...fresh danish pastries....then there would be a couple of ladys in the back doing ironing and pressing and bagging up...couple of slot machines

open 24 hrs/day.....

what do you rekon ?

Good enough idea and low cost to set up, but if there’s cash being handed over (and not put into a coin slot) and you’re not there 24/7, then you will get someone nicking off you - that is the law of the cosmos 😆

[eddoakley]

5 hours ago, Mungler said:

 

Depends what you have, what it’s like (schools, location and rentability) what it owes you, and what your capital gains tax position is.

I refinanced 3 last year (50% equity in all) and fixed interest rates for 5 years. All tenanted with same original tenants and so I’d be mad to touch them. 

Also, sitting on cash in high inflation is genuinely bonkers - in high inflation money tends to head towards fixed capital assets that can’t be inflated and bricks and mortar are a good place to start. 

£100k in the bank with real world inflation at say 10% and banks paying 2% on savings, you’re down £8k in year 1.

Whilst interest rates are going up, they are still ridiculously low when viewed historically and against current inflation rates. 

A brave person would rip a large mortgage out now, fix the rate (assuming nothing is looking like getting any cheaper for at least 2 years) and then look to do something sensible with that money - what I don’t know though 😆

 

At the risk of derailjng this thread even further (although it's still kind of on topic):

I've a few cheaper rentals, 2 to 5 bed. Not great areas but all the amenities you could need and could rent them all out 10 times over, I'm asked at least once a week if anything is empty but they rarely are.

In the main I've had decent tenants but when changing tenants there have been some issues with them not vacating. Dealing with one at the moment and waiting for a possession order in a week or so.

Bought over the past 20 years so various mortgages from not to a recent interest only which was a favour for a mate.

My thoughts are that the crash will start from the top and will push up demand for my level and we may never actually see a "crash" but more a levelling off and maybe a dip eventually.

[Mungler]

7 hours ago, eddoakley said:

At the risk of derailjng this thread even further (although it's still kind of on topic):

I've a few cheaper rentals, 2 to 5 bed. Not great areas but all the amenities you could need and could rent them all out 10 times over, I'm asked at least once a week if anything is empty but they rarely are.

In the main I've had decent tenants but when changing tenants there have been some issues with them not vacating. Dealing with one at the moment and waiting for a possession order in a week or so.

Bought over the past 20 years so various mortgages from not to a recent interest only which was a favour for a mate.

My thoughts are that the crash will start from the top and will push up demand for my level and we may never actually see a "crash" but more a levelling off and maybe a dip eventually.

It’s a funny old market place. All the builders in the south east are banged out and the price of Labour / materials is through the roof.

We are seeing more properties where if you costed them for a total loss / total rebuild (think fire), you could not physically get those houses rebuilt in this market place for the value they are being sold at (and which makes the land they sit on effectively ‘free’). That’s pretty much anything under £300k inside the M25/south east.

It could all level off - we are seeing loads of development being shelved for another day when it’s all calmed down and Labour / materials are cheaper, but hey, can anyone ever remember when anything ever actually got cheaper?

Also you look at the world right now and the various affected supply chains, I really can’t see anything ever getting cheaper. So if nothing is going to get cheaper than right now (food, energy, stuff from China, building materials and the cost of borrowing money) what next? Well, stagflation is on the cards - reduced growth coupled with unavoidable rising prices (inflation) driven by forces external to the UK economy.

Who knows? And when the governments of the world were planning their respective ‘what next’ after Brexit then there came covid, and when planning ‘what next’ there came Ukraine - it’s hardly worth making a plan really because it all goes out the window with the next / latest ‘out of nowhere global disaster 😆

As for renting, a Labour government is likely to kill it stone dead and this energy crisis will do for the Tory’s- so you need a plan for between now and the next general election.

I would still urge under renting to the right family - find some grafters with kids that they want to go to the local school and if the monthly rent could be say £1700 a month, charge that family £1500. It’s worked for me so far like a treat (touch wood) and when you do the maths and take into account rental gaps, agents / professional fees, damage, getting miscreants out and so on, it’s an economic no brainer. Also that family can’t get a better house for less money and they will stay and be grateful - everyone’s a winner.

[eddoakley]

4 hours ago, Mungler said:

It’s a funny old market place. All the builders in the south east are banged out and the price of Labour / materials is through the roof.

We are seeing more properties where if you costed them for a total loss / total rebuild (think fire), you could not physically get those houses rebuilt in this market place for the value they are being sold at (and which makes the land they sit on effectively ‘free’). That’s pretty much anything under £300k inside the M25/south east.

It could all level off - we are seeing loads of development being shelved for another day when it’s all calmed down and Labour / materials are cheaper, but hey, can anyone ever remember when anything ever actually got cheaper?

Also you look at the world right now and the various affected supply chains, I really can’t see anything ever getting cheaper. So if nothing is going to get cheaper than right now (food, energy, stuff from China, building materials and the cost of borrowing money) what next? Well, stagflation is on the cards - reduced growth coupled with unavoidable rising prices (inflation) driven by forces external to the UK economy.

Who knows? And when the governments of the world were planning their respective ‘what next’ after Brexit then there came covid, and when planning ‘what next’ there came Ukraine - it’s hardly worth making a plan really because it all goes out the window with the next / latest ‘out of nowhere global disaster 😆

As for renting, a Labour government is likely to kill it stone dead and this energy crisis will do for the Tory’s- so you need a plan for between now and the next general election.

I would still urge under renting to the right family - find some grafters with kids that they want to go to the local school and if the monthly rent could be say £1700 a month, charge that family £1500. It’s worked for me so far like a treat (touch wood) and when you do the maths and take into account rental gaps, agents / professional fees, damage, getting miscreants out and so on, it’s an economic no brainer. Also that family can’t get a better house for less money and they will stay and be grateful - everyone’s a winner.

Your last sentence is a dream for me.

Treat tenants well and keep rent below market value and they still have no decency or loyalty as soon as they get a chance to screw you over.

And renting becomes harder all the time with landlords seen as the enemy and poor old tenants just victims.

 

But overall, in terms of being able to make a plan I completely agree.

I guess its just something I've been mulling over while deciding what to do.

I'm 43 and decided that I've had enough of doing all the work, dealing with all the (expletive) staff and sometimes clients and seeming to come out of it with less than anyone else so I've just packed it all in and retired. I've enough income to pay the bills but I can't be stupid. I don't have to do anything but I've worked hard for 25 years and it's only been a few months and I'm looking at what to do. I've a few options and once my son is in school full time I'm sure I'll do something.

Property to develop is hard to find and getting more expensive and difficult to do plus I've completely fallen out of love with the building industry and see it going downhill very quickly soon. I still have a few staff in other businesses but this is the 1st time in 25 years that I've not employed anyone in construction yet I'm still asked every day to look at work.

I'm thinking of building some camper vans but prices of vehicles are through the roof. 

I have the option of some surveying and consulting that isn't too bad a thought but hardly excites me. So at the moment I'm enjoying time with my son and step son (and the mrs) fishing, shooting, camping and generally taking life easy. But I'm sure it won't last and I'll need to do something and that's where the thoughts about selling property came in. 

Reality is as you said, plans aren't worth making as there's always something changing. Roll with it and hope for the best. Sit tight for now.