# 17yr old with lump sum to invest



## Xraylady (17 Sep 2021)

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.


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## moneymakeover (17 Sep 2021)

Seems reasonable
Low risk


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## Pinoy adventure (17 Sep 2021)

Guaranteed a small return on it too


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## Brendan Burgess (17 Sep 2021)

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


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## moneymakeover (17 Sep 2021)

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.


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## jpd (17 Sep 2021)

"Being accessible" could be seen as a disavantage in some cases


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## pauliesbowl (17 Sep 2021)

moneymakeover said:


> Seems reasonable
> Low risk


Does anyone have any rough calculations on this? I personally am leaning towards the opposite direction but am open to correction.


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## jpd (17 Sep 2021)

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


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## moneymakeover (18 Sep 2021)

Ireland State Savings - 5 Year Savings Certificates | Products | State Savings
					

Our 5 Year Savings Certificates are a secure and straight forward way to save and earn interest on your savings over the medium term.




					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


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## camlin90 (18 Sep 2021)

Pinoy adventure said:


> Guaranteed a small return on it too



3% over 5 years.... meanwhile a 16% increase in electricity prices was announced yesterday. So it's already -13% for anyone who uses electricity...


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## Marc (18 Sep 2021)

This is a really important point. You need to be making about 3%pa currently or you might as well spend it!


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## Pinoy adventure (18 Sep 2021)

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...



I don’t think a 17 year old would be too worried about electricity prices tbh


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## Marc (18 Sep 2021)

However as a 17 year old I did understand the difference between a nominal and a real interest rate


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## Powderfinger (19 Sep 2021)

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...


So your income won't increase and electricity prices account for 100% of your expenditure? Wow!


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## NoRegretsCoyote (19 Sep 2021)

Marc said:


> However as a 17 year old I did understand the difference between a nominal and a real interest rate


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


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## camlin90 (19 Sep 2021)

Powderfinger said:


> So your income won't increase and electricity prices account for 100% of your expenditure? Wow!


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.


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## noproblem (19 Sep 2021)

Jeez lads and girls, go back to the original query. A 17 yr old wants a home for a few quid for a few years. He'll hardly be spending €90,000.00 on food, electricity and heating bills. Throw it into the An Post savings and it'll help in a few years. No rocket science degrees needed.


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## Itchy (19 Sep 2021)

Xraylady said:


> 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.



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.


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## Bill90. (20 Sep 2021)

I'd invest it with the Ask paul investment club. (Zurich dynamic fund).


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## ClubMan (20 Sep 2021)

noproblem said:


> Jeez lads and girls, go back to the original query. A 17 yr old wants a home for a few quid for a few years. He'll hardly be spending €90,000.00 on food, electricity and heating bills. Throw it into the An Post savings and it'll help in a few years. No rocket science degrees needed.


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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## Horatio (23 Sep 2021)

moneymakeover said:


> Ireland State Savings - 5 Year Savings Certificates | Products | State Savings
> 
> 
> Our 5 Year Savings Certificates are a secure and straight forward way to save and earn interest on your savings over the medium term.
> ...


Urrgh!

An unthinkable move IMO.


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## Marc (23 Sep 2021)

Actually you only lose some of the interest and the return is generally better than a bank account even on early surrender as we set out in detail  here

https://globalwealth.ie/news-and-views/how-do-i-get-the-best-return-on-my-savings


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