Help with some financial advice for my eldest
Discussion
After some advice for my eldest son who is planning to do a bit more with his money.
I appreciate the advice may be to see an IFA but worth the ask!
He's following me and joined the RAF as a pilot and is in flying training now. He's single and has very litte fixed costs bar his military accomodation and food. He has nearly maxed out his Cash ISA, got a couple of months of pay in instant access and is looking to invest £300-500 a month over next 5 years and after some advice. Unlike his younger brother he's not interested in actively managing anything or researching individual stocks and shares.
He's also got a lifetime ISA to help buying his first house.
He's in the MOD pension scheme so pension is in a good place and his only other significant outgoing is repaying his student loans.
Any thoughts on some options that are 'reasonable risk' so not something like crypto.
Much appreciated.
I appreciate the advice may be to see an IFA but worth the ask!
He's following me and joined the RAF as a pilot and is in flying training now. He's single and has very litte fixed costs bar his military accomodation and food. He has nearly maxed out his Cash ISA, got a couple of months of pay in instant access and is looking to invest £300-500 a month over next 5 years and after some advice. Unlike his younger brother he's not interested in actively managing anything or researching individual stocks and shares.
He's also got a lifetime ISA to help buying his first house.
He's in the MOD pension scheme so pension is in a good place and his only other significant outgoing is repaying his student loans.
Any thoughts on some options that are 'reasonable risk' so not something like crypto.
Much appreciated.
I'd be funneling it into Premium Bonds. If he's reached his limit if tax free saving, he's better off i would think, piling the spare income where it's tax free and with a chance of making a tax free return (yes the odds are slim, but they're still there). If the worst happens and he never wins anything, it's still a safe and tax free parking spot for his money.
osterbo said:
Continuing to increase the size of his emergency fund up to 12ish months isn't a terrible idea - and premium bonds would be a reasonable choice for that.
I'd go along with that. He sounds like he is doing pretty well already!Madness60 said:
bompey said:
I would think a stocks and shares ISA invested in something like a Vanguard life strategy 60% fund would make sense if he’s looking at 5 years plus.
Any particular thinking behind that fund? No idea how RAF pensions operate.....but building up a decent ISA buffer for when he hits later life will inevitably work well for him.
Madness60 said:
Buy to let an option but he's no idea, yet, where he could be based and whilst I've done long distance letting for a couple of years, it's a bit of a pain.
Looking for a better return and accept more risk than premium bonds
Set up a plan with someone like Columbia Threadneedle and invest in Investment Trusts ?Looking for a better return and accept more risk than premium bonds
Plan can be set up with a monthly subscription and all he needs to do is pick a few Funds that interest him the most - I think they have less than 10.
If he doesn't even want to do that much work put all the money into their flagship F&C Investment Trust which invests in something like 400 or so companies worldwide.
I did this for our 3 children when they were very small.
Maybe get his emergency cash up to 6 months pay first and PB's would work quite well for this.
Madness60 said:
bompey said:
I would think a stocks and shares ISA invested in something like a Vanguard life strategy 60% fund would make sense if he’s looking at 5 years plus.
Any particular thinking behind that fund? There’s more info on their website.
https://www.vanguardinvestor.co.uk/what-we-offer/a...
SunsetZed said:
Given his career trajectory it sounds highly likely that he'll pay off his student loan at some point so maybe worth overpaying some of that to bring it down?
He is overpaying already on these, although that took some effort as I think he almost ignores them as the money is deducted at source and I think he sees it almost like PAYE, NI and his accomodation charge! Madness60 said:
He is overpaying already on these, although that took some effort as I think he almost ignores them as the money is deducted at source and I think he sees it almost like PAYE, NI and his accomodation charge!
Noted but as many former students are realising the loans are now at something like 7.3% interest, so for many this debt is increasing annually as low standard payments are not covering the interest being applied.bennno said:
Noted but as many former students are realising the loans are now at something like 7.3% interest, so for many this debt is increasing annually as low standard payments are not covering the interest being applied.
If your salary hovers around/not much more than the repayment kick in level then it's like paying the minimum on a credit card for years so the overall balance goes up initially (interest is greater than any repayments), then if your career takes off you can end up paying a lot to reduce this balance down (like a mortgage possibly x3 the original loan sum after graduation) over the 30 year period. Hard to calculate what is the best thing to do, only will really know in hindsight after decades, I would only say that the conditions of these loans has always got worse, the interest rates gone higher with no caps and the repayment term before write off longer.
bennno said:
Madness60 said:
He is overpaying already on these, although that took some effort as I think he almost ignores them as the money is deducted at source and I think he sees it almost like PAYE, NI and his accomodation charge!
Noted but as many former students are realising the loans are now at something like 7.3% interest, so for many this debt is increasing annually as low standard payments are not covering the interest being applied.Madness60 said:
Buy to let an option but he's no idea, yet, where he could be based and whilst I've done long distance letting for a couple of years, it's a bit of a pain.
Looking for a better return and accept more risk than premium bonds
Regardless of where he is based now or in the future, could he not buy something local to yourself so you can manage it?Looking for a better return and accept more risk than premium bonds
Even if he makes little on it per month the hope would be for capital growth.
He'll need a house at some point given he's in the mess/service housing. Whatever he does that should be a priority unless he's coming back to live with you!
If he intends making a full career out of the RAF then the non contributory pension will be decent especially if/when he achieves rank. There is a risk of stagnating so early access pension options would need to be understood but anyone flight qualified will likely have no issue finding commercial pilot opportunities at decent money on exit. Such jobs are not likely to be close to home and maybe overseas in which case offsetting any accommodation costs need to be taken into consideration.
If he intends making a full career out of the RAF then the non contributory pension will be decent especially if/when he achieves rank. There is a risk of stagnating so early access pension options would need to be understood but anyone flight qualified will likely have no issue finding commercial pilot opportunities at decent money on exit. Such jobs are not likely to be close to home and maybe overseas in which case offsetting any accommodation costs need to be taken into consideration.
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