Discussion
My lad is 19 and we're looking at various ISAs.
Lifetime ISA seems a reasonable option as he gets a 25% bonus assuming Rachel doesn't stop that. Likely?
On the other hand, there's a limit as to when you can draw the money out; only for a house purchase or pension.
The likelyhood of him buying a house? Can't see him moving out and his comment "I'll not be able to afford to buy so I'll be renting".
He's extremely risk averse (like his Mum) are they available as a Cash ISA or only S&S?
Are they even worth the bother ?
Thoughts please.
Lifetime ISA seems a reasonable option as he gets a 25% bonus assuming Rachel doesn't stop that. Likely?
On the other hand, there's a limit as to when you can draw the money out; only for a house purchase or pension.
The likelyhood of him buying a house? Can't see him moving out and his comment "I'll not be able to afford to buy so I'll be renting".
He's extremely risk averse (like his Mum) are they available as a Cash ISA or only S&S?
Are they even worth the bother ?
Thoughts please.
Wish I’d started my LISA at 19. Just used it towards my first home. You have to be fully aware of its limitations though. It’s really only any good for first time home buyers or retirement savers. The penalty withdrawal fee makes taking the money out for any other reason very unappealing- you end up with less than you paid in.
In my case the upper limit of property value became a bit of a worry as time went on. In the end the property I bought was exactly £450k. The limits have not tended to increase in line with the inflation in property value.
I believe there is such a thing as a stocks & shares LISA which would probably be an even better idea.
In my case the upper limit of property value became a bit of a worry as time went on. In the end the property I bought was exactly £450k. The limits have not tended to increase in line with the inflation in property value.
I believe there is such a thing as a stocks & shares LISA which would probably be an even better idea.
Cash LISAs are available. However, there are very few providers and some of the rates being offered are laughable.
If your son is never going to buy a house, then he'll only be able to access his LISA funds when he turns 60. By comparison, the access age for a SIPP is currently 55 (57 from 2028). Who knows what those ages will be by the time your son is in his fifties / sixties, though?
A SIPP might be a better alternative, but it depends on his circumstances.
I'd suggest reading this: https://www.moneysavingexpert.com/savings/lifetime...
If your son is never going to buy a house, then he'll only be able to access his LISA funds when he turns 60. By comparison, the access age for a SIPP is currently 55 (57 from 2028). Who knows what those ages will be by the time your son is in his fifties / sixties, though?
A SIPP might be a better alternative, but it depends on his circumstances.
I'd suggest reading this: https://www.moneysavingexpert.com/savings/lifetime...
TwigtheWonderkid said:
Skyedriver said:
On the other hand, there's a limit as to when you can draw the money out; only for a house purchase or pension.
I think you can take it out for other reasons, but you lose the 25% bonus. Money box always seem to be the best of the Cash LISA. I have a 22 year old who has one, and an 18 year old who gets Equities etc so will be opening a S&S one.
used a cash lisa for my house purchase. painless and 25% return is as good any day of the week even if the interest rates were a bit pants. depending on how far aware potetional house purchase is S&S a consideration but would be a shame for a market downturn just in time when the perfect house comes around and you are forced to take the loss.
I started with skipton, transferred to moneybox. all handled by the solicitor during house purchase easily enough.
if you son is risk adverse then a guaranteed 25% sounds like a great option. The only risk is himself not buying a house then its a long wait to get his money back without a loss. there is some calculators around will calculate what the potential hit would be if he pulls money out and gets the 25% deduction. its not ideal but not ruiness.
I started with skipton, transferred to moneybox. all handled by the solicitor during house purchase easily enough.
if you son is risk adverse then a guaranteed 25% sounds like a great option. The only risk is himself not buying a house then its a long wait to get his money back without a loss. there is some calculators around will calculate what the potential hit would be if he pulls money out and gets the 25% deduction. its not ideal but not ruiness.
PaulWoof said:
used a cash lisa for my house purchase. painless and 25% return is as good any day of the week even if the interest rates were a bit pants. depending on how far aware potetional house purchase is S&S a consideration but would be a shame for a market downturn just in time when the perfect house comes around and you are forced to take the loss.
You could always transfer from S&S LISA to a Cash LISA once you know you are looking to buyOr sell to cash in the S&S and hold it like that for a few months if the account permits that
Thanks for all the suggestions
He's risk averse because his mother is, as she knows someone who lost quite a bit of money in 2008. Yes I know but the brick wall isn't listening.
TBH he's not financially savvy. He gets a few ££ each week from a P/T job an bits of cash at Christmas etc. He's happy with it in a mediocre bank account or in a tin in his bedroom although he's opened a FR cash ISA this weekend with a relatively small sum. He spends very little, the occasional present etc.
I'm blue in the face trying to explain stuff to him but I'm not that clever (see "what's your big gamble" thread LOL). And obviously I can't predict the future.
Might give the Lifetime ISA a miss, yes he may buy a house at some point, or inherit ours. He may well move away for work (after UNI) but that could well be rental. That's another topic all together though.
A SIPP is a possibility I hadn't thought but that takes me down another alley of discussion with him. Of or I might just suggest he adds to his S&S ISA
He's risk averse because his mother is, as she knows someone who lost quite a bit of money in 2008. Yes I know but the brick wall isn't listening.
TBH he's not financially savvy. He gets a few ££ each week from a P/T job an bits of cash at Christmas etc. He's happy with it in a mediocre bank account or in a tin in his bedroom although he's opened a FR cash ISA this weekend with a relatively small sum. He spends very little, the occasional present etc.
I'm blue in the face trying to explain stuff to him but I'm not that clever (see "what's your big gamble" thread LOL). And obviously I can't predict the future.
Might give the Lifetime ISA a miss, yes he may buy a house at some point, or inherit ours. He may well move away for work (after UNI) but that could well be rental. That's another topic all together though.
A SIPP is a possibility I hadn't thought but that takes me down another alley of discussion with him. Of or I might just suggest he adds to his S&S ISA
Skyedriver said:
TBH he's not financially savvy. He gets a few ££ each week from a P/T job an bits of cash at Christmas etc. He's happy with it in a mediocre bank account or in a tin in his bedroom although he's opened a FR cash ISA this weekend with a relatively small sum. He spends very little, the occasional present etc.
I doubt many 19 year olds are financially savvy. I can respect the way he lives within his limits. Not exciting perhaps, but better than getting into debt like so many people.What he needs now is a better job so he can save more.
Simpo Two said:
I doubt many 19 year olds are financially savvy. I can respect the way he lives within his limits. Not exciting perhaps, but better than getting into debt like so many people.
What he needs now is a better job so he can save more.
Within his limits? Spends nothing, subsidised by Bank of Mum & Dad What he needs now is a better job so he can save more.
He's in the middle of a 4 year uni course which must take priority.
Yes when I was 19 I invested my hard earned in wine (well beer), women (not many of them) and song. Plus a lot on cars and motorsport. Saving - no, unless it was for another car.
PlywoodPascal said:
Alive
Joking aside, people like that need educating on the risk of storing your money in a tin or in cash for long periods. The mother too - it surprises me on this forum how many married couples have totally separate savings and investment strategies. It’s so damaging to your long term prosperity to think like that. Often these people are still heavily exposed to equities they just have zero idea where their pension money is being invested.
okgo said:
Joking aside, people like that need educating on the risk of storing your money in a tin or in cash for long periods. The mother too - it surprises me on this forum how many married couples have totally separate savings and investment strategies.
It’s so damaging to your long term prosperity to think like that. Often these people are still heavily exposed to equities they just have zero idea where their pension money is being invested.
Agree, but the brick wall hasn't any ears and he's just not really interested at 19. Guess I wasn't either at 19.It’s so damaging to your long term prosperity to think like that. Often these people are still heavily exposed to equities they just have zero idea where their pension money is being invested.
Wife's pension is a collection of final salary ones from various jobs over the years, increases are in line with inflation. Savings into Fixed rate ISAs etc.
Skyedriver said:
Within his limits? Spends nothing, subsidised by Bank of Mum & Dad
He's in the middle of a 4 year uni course which must take priority.
You didn't mention he was at university, it came across like he lived in his bedroom. Are you paying for that as opposed to a student loan? Useful degree?He's in the middle of a 4 year uni course which must take priority.
Being so risk adverse at such a young age is guaranteeing a lifetime of poor returns.
Maybe open a cash lifetime ISA, and separate stocks and shares ISA, drip feeding just a small amount in.
My parents were similar, got badly advised many years ago (early 90's), after around 5 years they managed to get out what they put in, but never touched investments again. Although they are very comfortable through hard graft and perseverance, they could have been relatively wealthy had they invested just some of their income over the years into a global fund.
This rubbed off on me a bit until I opened a stocks and shares ISA around 6 years ago, now around 75% of my savings are in funds or individual stock picks.
Maybe open a cash lifetime ISA, and separate stocks and shares ISA, drip feeding just a small amount in.
My parents were similar, got badly advised many years ago (early 90's), after around 5 years they managed to get out what they put in, but never touched investments again. Although they are very comfortable through hard graft and perseverance, they could have been relatively wealthy had they invested just some of their income over the years into a global fund.
This rubbed off on me a bit until I opened a stocks and shares ISA around 6 years ago, now around 75% of my savings are in funds or individual stock picks.
Simpo Two said:
Skyedriver said:
Within his limits? Spends nothing, subsidised by Bank of Mum & Dad
He's in the middle of a 4 year uni course which must take priority.
You didn't mention he was at university, it came across like he lived in his bedroom. Are you paying for that as opposed to a student loan? Useful degree?He's in the middle of a 4 year uni course which must take priority.
It's a follow on to the Covid scenario where all lessons were internet based. He got about 18 months in school before the degree course.
As a result, his social side of life is none existent.
Sounds like a challenge.
I always felt it was our job as parents to talk money and empower our offspring. Sometimes easier said than done!
A LISA is almost a no-brainer to me - it is free money from HMRC towards that eventual house deposit, even if it is 10-20years away. Also: make it a S&S one so it can grow with the markets, not lose out to inflation.
Our offspring are both now earning & living in London, which means that £450k limit might be a genuine obstacle to using the LISA - it really should have kept pace with inflation…..
…but even then, if they can’t use it to help buy a house, once they are 60 it should be a decent help to bridge to any State Pension….just means we have also encouraged them to save in normal S&S ISA as well: spread those bets
Do you and your wife not talk about money much? It sounds like you are on different pages.
One poor 3rd party experience shouldn’t sour an investment outlook.
You ought to be talking the same story to share knowledge, not strike fear!
Plenty of scary things in the world - see US markets under the genius businessman! - but markets broadly continue to grow, especially if you are investing regularly. Show him this to see why stock markets keep rising, despite “bad news”
It feels to me like the bigger challenge really is getting him a social life. It’s a tough world out there, but plenty of opportunities to those willing to try. He’s young, & needs to be out there having fun.
I always felt it was our job as parents to talk money and empower our offspring. Sometimes easier said than done!
A LISA is almost a no-brainer to me - it is free money from HMRC towards that eventual house deposit, even if it is 10-20years away. Also: make it a S&S one so it can grow with the markets, not lose out to inflation.
Our offspring are both now earning & living in London, which means that £450k limit might be a genuine obstacle to using the LISA - it really should have kept pace with inflation…..
…but even then, if they can’t use it to help buy a house, once they are 60 it should be a decent help to bridge to any State Pension….just means we have also encouraged them to save in normal S&S ISA as well: spread those bets
Do you and your wife not talk about money much? It sounds like you are on different pages.
One poor 3rd party experience shouldn’t sour an investment outlook.
You ought to be talking the same story to share knowledge, not strike fear!
Plenty of scary things in the world - see US markets under the genius businessman! - but markets broadly continue to grow, especially if you are investing regularly. Show him this to see why stock markets keep rising, despite “bad news”
It feels to me like the bigger challenge really is getting him a social life. It’s a tough world out there, but plenty of opportunities to those willing to try. He’s young, & needs to be out there having fun.
mikeiow said:
It feels to me like the bigger challenge really is getting him a social life. It’s a tough world out there, but plenty of opportunities to those willing to try. He’s young, & needs to be out there having fun.
Thanks MikeI agree but times are very different now to when I was 19 (1972), working, motorsport, pub, music, never at home except sleep & meal times.
For a lot of kids, especially the more timid and maybe reticent, Covid lockdown did for them. And moving out to a uni at the age of 17, when you're maybe not that worldly is a risk, hence his decision to study from home, as are a lot of kids up here in the Highlands.
He's zero interest in sport of any kind, main interest is genealogy, so sat in front of the computer again doing research. We live in a small community, 10 mile from the nearest town. One that is very busy during the summer and quiet over the winter. Recently described as the new Brighton, where at one time, before we came, drink and fight were apparently common place but now it's cocaine. His 4 or 5 school friends are now at uni elsewhere or live 20 mile away or on an island. But we digress.
Whether the Lifetime ISA with it's bonuses (assuming they continue and I have my doubts) and restrictions is a better option than a straight forward S&S ISA needs to be decided upon in he next few days.
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