17yr old with lump sum to invest

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Xraylady

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17 yr old in fortunate position of having inheritance 90k presently lodged in 2nd account in his bank . Not needed for at least 5 yrs . I was thinking that maybe when he turns 18 in 4 months he could take out 5 year An Post savings? I’d leave it till then as can be messy setting up under 18 account and changing over. Does this seem reasonable? Thanks.
 
It is also a good idea to give him a real lesson in how the stockmarket works.

Use at least some part of it to buy shares in a few companies and he will get practical experience.

However, he may be tempted to punt it all on Bitcoin.

Brendan
 
I am guessing like any young person going out into the world, in 5 years time they will want their own place to live.

And the 90k would form nice deposit. Maybe even a holiday as well.

Another advantage of the 5 year post office savings is it's accessible. But to your advantage to leave it there for the full term.
 
An Post savings are low risk - probably couldn't get much lower risk savings in Ireland

Calculations on what - interest rate - well, it's low too, almost non-existant but low risk equals low interest
 

5 Year Savings Certificates | Products | Ireland State Savings

Save a lump sum for 5 years with 5 Year Savings Certificates for a tax-free return with no fees, and access to your money should you ever need it.
www.statesavings.ie


3% after the full 5 years

"To benefit from the full return, you must hold the product to maturity"

In other words if you cash in a portion early you lose the interest on that portion.

After 5 years 90k becomes 92.7k
 
However as a 17 year old I did understand the difference between a nominal and a real interest rate
 
camlin90 said:
3% over 5 years.... meanwhile a 16% increase in electricity prices was announced yesterday. So it's already -13% for anyone who uses electricity...
Click to expand...
So your income won't increase and electricity prices account for 100% of your expenditure? Wow!
 
Marc said:
However as a 17 year old I did understand the difference between a nominal and a real interest rate
Click to expand...
And did you also extrapolate today's inflation rate forward for five years?

I'd be surprised if stayed at that level for so long
 
Powderfinger said:
So your income won't increase and electricity prices account for 100% of your expenditure? Wow!
Click to expand...
Believe it or not yes, a lot of people are on fixed nominal incomes, or in industries where they are lucky to get a percent or two.

And yes, for a lot of people, electricity and heating, and all the things that require energy, are a major component of their budgets. Need a roof over your head? Try building a house without energy.

Then there are the others lucky enough to be lumped a 20pc pay rise , see a 20pc rise in their stock portfolio. dismiss the concerns of others and potter along on their merry way. Lots of those running countries and central banks, surprisingly.
 

Depending on the maturity of the 17 year old, this could be an opportunity to discuss the advantages that such a sum could bring if used correctly. You could talk to them about the major financial/life events that will come over the next decade and the potential financial challenges. Encourage them to take some of the responsibility for the decision making and sit down together to write out and agree a financial plan.

If you have an open relationship you could discuss the family finances in a holistic way which might open up more efficient uses of the capital such as taking advantage of your pension tax relief or reducing your mortgage balance. Obviously making them whole when the time comes.

One key life event will be that they will need to learn to drive. I would take a portion and buy them a car, ensuring they get plenty of lessons (even advanced driving skills RoSPA etc.). They will be driving long before any friends and you have an opportunity to instill the right skills in them before they can be influenced by the driving behavior of their friends.
 
It really depends on what "a few years" is.
Even state savings returns will be marginal or could effectively be negative depending on inflation.
The risk of capital erosion is real.
It's not the no brainer than you suggest to not consider higher risk/reward investment options.
 
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