Small pot investment advice please

[T6 vanman]

Hi all

Firstly unlike most on PH I'm not a PB company director ... rather a middle age factory worker .. joe average on ave wage.

I started a with profits savings account for £25 per month when my son was born for what I thought was 18 years (to mature on his 18th)
So yesterday I (My son) receives a letter stating the policy will end soon (on his 17th birthday) and he has three options
1, Extend the plan - sign up for a minimum of another 10 years & continue paying £25 (apparently can cancel & pays out upon request)
2, Revalue plan - no more payments and can draw out part funds
Both of these options; the savings are in investments that can rise or fall and he could loose some of the capital
This I'm worried about due to current and future political / financial risk (please can I ask no one derails this thread with Brexit etc THANKS)
To explain the plan value (end Dec 17) is £8.4k but last yr was £7.25k 2015 was £6.1k 2014 was £5.8k & 2013 $5.5
So as you can see the last two tears have seen great increase in plan value .... but the previous years saw no growth and some earlier years I saw losses
Option 3, Cash in the plan

I plan to sit me son down and discuss the options with him,
My option would be to cash in the plan and safely invest £8k and let him spunk the £400 ish
I'd either like some sort of no risk about 5% per year investment or just put into Premium bonds and let him have the winnings as and when,

So my question is:
What sort of investments will take about £8k and provide 5% interest .. risk free?

Thanks in advance

[anonymous-user]

I'm afraid to say that you cannot get 5% on 8k risk free.

Options are P2p, a fund with a decent yield, several savings accounts with current accounts attached and a lot of faff or maybe he could pay £8k off your mortgage and you pay him the rate you pay.

[T6 vanman]

Should say,

Bare in mind I'm a middle age factory worker .. joe average on ave wage.

When you say "P2p" please explain these codes as genuinely I'm not that clued up

The most faff free the best as well

[Defcon5]

Maybe take it out, put it in the highest interest current account you can find and drip feed it into a Help to buy or lifetime ISA at the max allowable rate so he can use it to buy a house.

The govt top these up by 25%, and you arent going to match that anywhere else. Don’t know where you live but that might give him 10% to put down on a decent first house by the time he is 21

[anonymous-user]

investment fund feeding into a stocks and shares ISA.

yes there is some risk but if the spread is decent then you really are unlikely to lose as long as you dont want to withdraw short term

over the last 15 years I have made significant returns even taking into account the crash, and my average return over the last 10 years has been +8%

I am of course not a financial advisor and this advice is worth exactly what you paid for it

[anonymous-user]

T6 vanman said:

Should say,

Bare in mind I'm a middle age factory worker .. joe average on ave wage.

When you say "P2p" please explain these codes as genuinely I'm not that clued up

The most faff free the best as well

p2p means peer 2 peer so something like Zopa.

It's clearly a lot of money for you, I honestly reckon you'd be better off in a guaranteed bond returning less but being safe.
Post Office do one at 1.8% and while it's not the best return your money is safe. That's a better bet than Premium Bonds - if you feel you're missing out on the chance to win, buy a lotto ticket every week

[anonymous-user]

keirik said:

investment fund feeding into a stocks and shares ISA.

Other way round surely?

[bitchstewie]

I wish I'd read this @ 18

https://theescapeartist.me/2016/01/21/the-3-number...

[sidicks]

bhstewie said:

I wish I'd read this @ 18

https://theescapeartist.me/2016/01/21/the-3-number...

Interesting at a high level, but his fee comparison is so cherry-picked and clumsy it is embarrassing!

Of course if you compare a very high charging fund to a very low charging fund and assume that they both produce exactly the same stable returns from Year to Year, and then you compound that go over a long term, you get a very big number.

In the real world, things don’t work like that!

Edited by sidicks on Sunday 7th January 13:18

[bitchstewie]

sidicks said:

Interesting at a high level, but his fee comparison is so cherry-picked and clumsy it is embarrassing!

Of course if you compare a very high charging fund to a very low charging fund and assume that they both produce exactly the same stable returns from Year to Year, and then you compound that go over a long term, you get a very big number.

In the real world, things don’t work like that!

Edited by sidicks on Sunday 7th January 13:18

I don't doubt it, the compound interest example was the bit I was driving at as it was a real kick up the arse piece for me, assuming any kind of half-decent average return over the long term.

[T6 vanman]

Defcon5 said:

Maybe take it out, put it in the highest interest current account you can find and drip feed it into a Help to buy or lifetime ISA at the max allowable rate so he can use it to buy a house.

The govt top these up by 25%, and you arent going to match that anywhere else. Don’t know where you live but that might give him 10% to put down on a decent first house by the time he is 21

Yes .. Posted question ... spent 10 minutes reviewing all options on my bank's website and looked at HTB ISA's ... Just did a 7.5 mile run whilst mulling it over and think this is likely the option I'll put to my son, So to you Defcon
What I'm thinking is I take most of it (give him a splurge fund) then set up a DD of the max per month and just continue it until he's ready to fly the nest .... Whilst it may not be the best option for you financially savvy guru's it looks to meet what I want - Question is ... am I missing something or does this look sensible to you lot?

Edited to add HTB ISA rule 2
Step 2 - Save up to £200 per calendar month and an additional £1,000 in the first month you make a subscription - So my son's pot would fund 3 years worth of ISA deposits & the government would add £2.1k ... Mmmmm - risk free

Edited by T6 vanman on Sunday 7th January 14:06

Edited by T6 vanman on Sunday 7th January 14:08

[T6 vanman]

bhstewie said:

I wish I'd read this @ 18

https://theescapeartist.me/2016/01/21/the-3-number...

Thanks ... I agree saving is good but that was the sort of financial advice I struggle with,

Kate places £2k at 18 in investments and makes £1m at 65

To my puny mind Kate is putting 7 x £2k (the equivalent to 7 x new E Type Jag's in 67) into investment to get
what the equivalent to x15 new Jags now?

Anyway once my talk with son is over I'm sure more help will be asked

[bitchstewie]

T6 vanman said:

Thanks ... I agree saving is good but that was the sort of financial advice I struggle with,

Kate places £2k at 18 in investments and makes £1m at 65

To my puny mind Kate is putting 7 x £2k (the equivalent to 7 x new E Type Jag's in 67) into investment to get
what the equivalent to x15 new Jags now?

Anyway once my talk with son is over I'm sure more help will be asked

I'd take the article with a huge pinch of salt other than the general point that compound interest can make a consistent but relatively small contribution at the time turn into something bigger than you may think over the long term.

[Cockernee]

www.fundingsecure.com

10 - 13% returns

[sidicks]

Cockernee said:

www.fundingsecure.com

10 - 13% returns

OP said:

“...sort of no risk about 5% per year...”

!!!!