[Closed] What to do with £24,000 (apart from Coke n hookers)

Someone asked a question similar on here recently. One of the replies was to invest up to 15k in a stocks and shares ISA which you can invest into a fund. For example the Fundsmith fund which is roughly 15% over the past few years. I'm about to leave uni and start saving so I've been looking into it. You can even invest directly on their website https://www.fundsmith.co.uk/Home.aspx

happy birthday s jnr!!

What sort of tiemscale are we looking at- I guess 3-4 years min.

Aims should be (I've a lad heading for university later this year and in much same situation w.r.t. grandparents as it happens). His cash is already been invested in a mixture of steady gilts & bonds, and some longer term - growth rather than income - inv. trusts.

The idea is that we have control over this (he could, in theory, get control of it but that would be less favoured option and the brokers will stall for that) and than the income will be 50% re-invested and 50% returned to him for uni boost (equipment, travel to home).

Some investment trusts will allow you to withdraw at a rate higher than the yield, but that's more for folk at the other end of the age spectrum TBH.

I'll be taking financial advice from a professional, but wondered if anyone had any pointers

Yeah, listen to the professional 🙂

where is he going to live whilst at uni? What are the house prices like there?

Could do worse than invest in bricks and mortar that he lives in and rents out to other students

A friend of mine, at the same age, spent a similar amount, on drink, drugs and a really nice stereo. 15 years later he wishes he'd done a deposit for a house.

apart from Coke n hookers

So you're intent on just wasting it all then? 😉 😆

I'll be taking financial advice from a professional but wondered if anyone had any pointers

Yes - don't do that. If they were such experts then they'd all be rich, not driving an ageing Mondeo while trying to flog life insurance to folk who don't need it! I last showed the door to an IFA in 2004, and I'm considerably better off as a result of having shunned them ever since.

Go figure it out for yourself, it's not hard. Start with MoneySavingExpert. Cut out middle-men at every opportunity.

Any experience with property? £24k could make a reasonable deposit on a student house.

We say to work on a basic assumption of £8500 living expenses per academic year, he's probably not going to be living on the interest but the capital. Though he may be eligible for the young student bursary depending on household income. May well be worth taking out the student loan as your investment could well beat the inflation there

(The SAAS website is pure shite btw but it's worth digging through!)

Where's he off to btw? If it's an inflationary area then yep student flat can be an excellent investment, in later years at least (first year in halls, it's the law)

I think that it has to be the best cash products. I would advise against the stock market when you know when you need to spend the money. If he moves quickly get it all in ISAs. The limit is £15,000 a year but the new year starts in April

Mind your business and let the lad do what he wants with HIS money 😀

Could do worse than invest in bricks and mortar that he lives in and rents out to other students

Not a bad idea.. seems like plenty of people made a lot of money that way.

where is he going to live whilst at uni? What are the house prices like there?

Could do worse than invest in bricks and mortar that he lives in and rents out to other students

+1

10% deposit...take rent from mates to pay mortgage...he lives for free (potentially) and is 3/4 years ahead on the property game when he leaves university. He'd be in a better position than an overwhelming majority of the other graduates.

He's free to rent it out while he goes travelling, selling up and realising any gains or move elsewhere with a nice bit of equity to boot.

My mate's parents gave him £20k when we started university to do just that. He bought a place for £150k and three of us lived in it for 4 years. When we left university he moved to London and rented it out for another few years and then sold it for £260k...which has given him a nice deposit for a London pad, even after paying back his parents...all for free in effect.

If you persuade to invest it and it loses money he may well hate you.... I did have unit trusts as a student bought with money I saved from my placement but mostly kept cash.

Thanks for the usual STW malarkey, and the sensible answers.

He's off to Heriot Watt on the outskirts of Edinburgh. Household income means he'll get the minimum loan, and the idea I had was to tie the money up to be released over the next three years.

he's guaranteed a place in uni accommodation in the first year, which he is keen to use.

He could save the lot and live at home - theres a bus to the campus that leaves from the bottom of the road, but noone wants that apart from his Mum!

Stocks and shares ISA £15k now, £9k next month.

On £24k you should be looking at around £3.5k return each year. Put the profit towards funding the university costs.

If you want to tie it up then keep reinvesting. Over 3 years you should easily expect the £24k to grow to around £34k.

buying a student flat and renting it out sounds like the best plan to me.

10% deposit...take rent from mates to pay mortgage...he lives for free (potentially) and is 3/4 years ahead on the property game when he leaves university.

... with a house that's had students in it for four years. Fine if you're going to keep it as student accommodation / sell it on to someone who is, but I probably wouldn't want to be starting 'adult' life there.

with a house that's had students in it for four years. Fine if you're going to keep it as student accommodation / sell it on to someone who is, but I probably wouldn't want to be starting 'adult' life there.

Eh? It's bricks and mortar? We lived in the middle of a city. He had it painted and new flooring after we moved out and young professional couple and their kid moved in.

Why not be sensible with £20k and let him have a little fun with the other £4k?

Life is too short to be sensible all of the time.

[i]He could save the lot and live at home - theres a bus to the campus that leaves from the bottom of the road, but noone wants that apart from his Mum! [/i]

Until he realises he can buy his own car and run it - or after a few days when he moves out and realises that fridges don't fill themselves...

If he was mine, I'd advise him to stay at home and save money.

If he was mine, I'd advise him to stay at home and save money.

I get what you're saying in terms of saving money...but university isn't just about getting your degree...living away from home is part of that experience and by still living with his parents he will miss out on a HUGE part of the experience IMO.

[i]On £24k you should be looking at around £3.5k return each year. Put the profit towards funding the university costs.[/i]

[i]If you want to tie it up then keep reinvesting. Over 3 years you should easily expect the £24k to grow to around £34k.[/i]

I have a similar amount to invest so am keen to hear more on this one. Any pointers on which ISA will return £10 profit in 3 years?

DrP Jnr will be in a similar boat in 13 years time...

I'll strongly be suggesting he put it down as a deposit on a student house, and get on the property ladder ASAP.

I wish I had (though only had the student loan as finance!). Seeing friends that had bought houses 'leapfrog' to a great housing start is a real eye opener to the benefit of sound investments!

DrP

Any pointers on which ISA will return £10k profit in 3 years?

That all depends on the stock markets and what happens in the next 3 years, to which no one knows the answer!

I have a similar amount to invest so am keen to hear more on this one. Any pointers on which ISA will return £10 profit in 3 years?

THIS

peteimpreza - Member

Why not be sensible with £20k and let him have a little fun with the other £4k?

Life is too short to be sensible all of the time.

which has had a 75% increase in the past year year.

Excellent, so now we've got coke, hookers and [i]gambling[/i] 🙂

Cheers marmaduke I'll take a look.

[i]That all depends on the stock markets and what happens in the next 3 years, to which no one knows the answer![/i]

Yes I understand that, I should have phrased the question 'any recommendations for a reputable fund'.

Also this guide is handy http://www.moneysavingexpert.com/savings/stocks-shares-isas

Could do worse than invest in bricks and mortar that he lives in and rents out to other students

Depending on how sensible he is this is the best idea purely because it will stop him pissing it up the wall. If it's in ISAs it's very easy to get at.

Bricks and mortar is a good shout. I bought a town centre property in Aberdeen for £25k when I was at uni, lived there for a year, rented it out for the last 20 years and its value has grown quite a lot.

Excellent choice that Smudger 😆 YGM

Fund selection should be done on a cautious approach, but with a bit of research you should be able to find something with a medium risk and good return. A lot of the US equity funds have had good solid performance over the last 7 years even through the ups and downs, average returns have been around 12% but in the last year those have been more like 22-25% returns. Take a look at Vanguard funds. Some nicely balanced portfolios.

On £24k you should be looking at around £3.5k return each year

Based on what!!!!!! If you tried that in 2008 you'd lost 40% of your money in a year

Property can be good. But only one propety is risk

Co worker is starting a family in a rented flat as he can't sell the flat he bought as a student. I have nearly bought a house twice and been told by an expert it was the time. Both times house prices fell for the next 3 years

On the other hand is buy to let looks like the default retirement plan. So prices will go up and owning your own home probably die for most people

Based on what!!!!!! If you tried that in 2008 you'd lost 40% of your money in a year

Based on experience.

I have a similar amount to invest so am keen to hear more on this one. Any pointers on which ISA will return £10 profit in 3 years?

£24k is nice but personally I wouldnt bother an IFA. As above (and on the other thread referenced above) I would invest in a stocks and shares ISA. I recommended Fundsmith however there are lots of funds that have performed better over the last year or so but its growth has been very good.
If you choose just one fund (you may want to diversify but I wouldnt) you may be able to open an ISA directly and invest. If you want to build a basket of funds you will need to use a platform which will charge (recommend III if you choose to do that)
I wouldn't bother buying property unless it is something to live in. Tried that and it is significant hassle with upkeep, legals, tenants etc. I have had significantly higher returns from investments over the last few years.

[quote=surfer said] I recommended Fundsmith however there are lots of funds that have performed better over the last year or so but its growth has been very good.

Fundsmith invest in tobacco companies BTW (just in case anyone's moral compass precludes such companies)

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=LSFX1&univ=O&pagetype=portfoliobreakdown

I think anyone investing needs to do their own due diligence!

If the 2008 crash has taught us anything (which it obviously hasn't), people shouldn't just blindly assume that fund x will return in excess of y% per year. We've been climbing out of the crash for the last few years, so a lot of funds show good growth over this period, but it won't last. Stock markets tend to go in cycles (say 6 years) i.e. they keep climbing until they appear over priced or an external factor comes along like QE ending or interest rates rising etc and then you get a correction.....

Hi Surfer, yes it was your post that made me look into funds. Do you invest directly through Fundsmiths? And if so is there a 'user account' page where you can track your investment? Or do they just post/email a statement?

Hi Marmaduke

[url= https://www.fundsmith.co.uk/Home.aspx ]Fundsmith[/url]

You can do it online and they will send paperwork out. Once open you can track on the website.

I've been 'into' investment since I studied it as part of my business studies course in the late 80s - in fact my 1st year coincided with Black Monday. So I've seen a lot of ups and downs and invested to some degree for most of that time. In the late 90s some people were investing heavily in tech stocks making large gains in short periods. There was a fund at that time that was doing incredibly well - Henderson Technology IIRC - and a mate of mine decided to listen to another mate who told him he should put his £7k ISA allowance into it. Well then the bubble burst and I'm not sure how much he lost but certainly it was worth less than £1k at one point. So consider what you invest in, will Fundsmith carry on doing so well? Sure it won't collapse and I doubt it will ever be a bad fund but to assume it will carry on doing so well is optimistic. I'd put some money in for sure but I'm well diversified.

doubt it will ever be a bad fund but to assume it will carry on doing so well is optimistic. I'd put some money in for sure but I'm well diversified.

I'm not a cheerleader for Fundsmith it is just one of the funds I invest in. In terms of diversification as long as you choose a small number of funds then that should be enough. Each should be diverse enough in its own right. Fundsmith has 27/28 stocks in its fund across a number of regions/sectors which is quite diverse. I have several other funds which dont overlap but issues in one sector or region that are significant enough to make a big impact will affect your funds regardless of how diverse they are. Remember a diverse portfolio can be expensive.

I'm a pretty passive long term investor, e.g. I had a look today for the first time in a year to see how my funds have done over the last 12 months.

SIPP is up 25% in the last 12 months, ISAs is up 16% in 12 months.

My best funds in the last 12 months were:
GLG Japan CoreAlpha Professional Class - Accumulation (GBP) up 32%
GLG Technology Equity Professional Class - Accumulation (GBP) up 31%
CF Woodford Equity Income Class Z - Accumulation (GBP) up 18.6%

Worst performing were:
Schroder Core UK Equity Class Z - Accumulation (GBP) - 3%
Invesco Perpetual UK Smaller Companies Equity Class Z - Accumulation (GBP) - 5%

The SIPP was the higher risk investments (Japan & Tech) i.e. fewer niche funds which might do very well, or might do very badly. The ISA is spread over a larger number of more conservative funds.