Investments for kids
Discussion
My niece and nephew are 5 and 3. They get so many toys and things at Christmas they'll still be opening them at Easter probably. So I'd like to pop them both £50 in some kind of account and then keep topping it up at Birthdays and perhaps every now and again throughout the year if I have some spare cash. I'd like them to be able to get to it when they're about 17 or 18 and put it towards Uni fees, College or a house deposit - whatever.
Any suggestions on the best way to do this and get decent returns (Better than the low ISA or poor chance on Premium Bonds) I'd prefer it to be in their names with me or the parents allowed to manage it. I also have a nephew (2 years old) who lives abroad and would like to do the same thing for him too, but would like it to be in the UK if possible.
Any suggestions on the best way to do this and get decent returns (Better than the low ISA or poor chance on Premium Bonds) I'd prefer it to be in their names with me or the parents allowed to manage it. I also have a nephew (2 years old) who lives abroad and would like to do the same thing for him too, but would like it to be in the UK if possible.
We used to buy National Savings Childrens Bonus Bonds for our children. They have a 5 year rolling term and pay out on the anniversary date after the child is 16. It's surprising how £50 every Xmas and Birthday adds up over the years.
The other alternative is a Children's ISA. Somebody like www.fundsmith.co.uk should give good growth over the next 15 years or so, but I think there is a minimum amount you can invest.
I am not an advisor, have no financial qualifications and am not linked to either of the providers mentioned.
The other alternative is a Children's ISA. Somebody like www.fundsmith.co.uk should give good growth over the next 15 years or so, but I think there is a minimum amount you can invest.
I am not an advisor, have no financial qualifications and am not linked to either of the providers mentioned.
I think the answer will be different for the 5 and 3 year olds.
The 5 year old will have had a CTF fund set up to which the government will have contributed. My little one came along on the day this changed, so not too familiar with the best options here.
The 3 year old was born in the JISA years. You may be able to beat the cash JISA (3-4% around) rate in a stocks / shares JISA. Investments are capped, currently @ £4k this tax year. Bear in mind that as the children are unlikely to earn enough to pay income tax, regular savings accounts are also worth considering, as there's no tax advantage to having their money in the ISA wrapper. The advantage of building JISA money is in the hope that they won't need to spend it, so will benefit from significant tax free savings through their working life. They will not be able to spend JISA money until they are 18. After that, it's theirs to spend on hover boards etc.
For my 3 year old, we use a self select JISA from hl.co.uk which I manage. For the main, performance has been very good (stock market has risen sharply in her lifetime), so she's about 30% up. Very much doubt that level of capital growth will continue, but the dividends will keep trickling in.
One alternative type of investment is to create a pension for the kids. Sounds strange, but the government will add the tax that YOU have paid into the pot, so that could be a ~40% return for 'free'. Of course this is seriously long term and the kids won't be able to draw on it for many years, though it may mean that they can 'enjoy' more of their own income as they'd have a good head start in their pension savings.
There are several other threads on this with other details / ideas that may be worth searching for.
The 5 year old will have had a CTF fund set up to which the government will have contributed. My little one came along on the day this changed, so not too familiar with the best options here.
The 3 year old was born in the JISA years. You may be able to beat the cash JISA (3-4% around) rate in a stocks / shares JISA. Investments are capped, currently @ £4k this tax year. Bear in mind that as the children are unlikely to earn enough to pay income tax, regular savings accounts are also worth considering, as there's no tax advantage to having their money in the ISA wrapper. The advantage of building JISA money is in the hope that they won't need to spend it, so will benefit from significant tax free savings through their working life. They will not be able to spend JISA money until they are 18. After that, it's theirs to spend on hover boards etc.
For my 3 year old, we use a self select JISA from hl.co.uk which I manage. For the main, performance has been very good (stock market has risen sharply in her lifetime), so she's about 30% up. Very much doubt that level of capital growth will continue, but the dividends will keep trickling in.
One alternative type of investment is to create a pension for the kids. Sounds strange, but the government will add the tax that YOU have paid into the pot, so that could be a ~40% return for 'free'. Of course this is seriously long term and the kids won't be able to draw on it for many years, though it may mean that they can 'enjoy' more of their own income as they'd have a good head start in their pension savings.
There are several other threads on this with other details / ideas that may be worth searching for.
Thanks chaps. It looks like JISAs are the way to go then. It looks like April 2015 the ruled will change so they can both have one then regardless of when they were born. I may just wait until then and ask their parents to open them and I'll deposit some money. A Stocks and Shares ISA with a FTSE tracker seems like a good bet.
I found some useful information here: http://www.thisismoney.co.uk/money/investing/artic...
I found some useful information here: http://www.thisismoney.co.uk/money/investing/artic...
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