H&L - Junior Sipp - Application Form

[joestifff]

Morning all.

I am completing a Junior SIPP form for my 1 year old daughter. I will only be putting £40.00 a month in, she already has a Junior ISA.

The form asks about "Your Investment Choice" I presume, this is where it will put my monthly DD, however, with investing a low amount every month would it make sense to put this into "cash" to then choose the investments later, say once a year so I am not paying £12 or whatever they charge for each trade?

Just wondering how other people do it with such low monthly value?

Many thanks

[joestifff]

One last bump on this.

If not I will put it all to cash on the form, and buy shares annually to reduce the transaction costs.

Cheers

[JulianPH]

joestifff said:

Morning all.

I am completing a Junior SIPP form for my 1 year old daughter. I will only be putting £40.00 a month in, she already has a Junior ISA.

The form asks about "Your Investment Choice" I presume, this is where it will put my monthly DD, however, with investing a low amount every month would it make sense to put this into "cash" to then choose the investments later, say once a year so I am not paying £12 or whatever they charge for each trade?

Just wondering how other people do it with such low monthly value?

Many thanks

Hi

Are you looking to buy shares or funds?

HL charge for buying/selling shares but not for buying/selling funds, so low cost trackers are most likely your best option as the money gets to work straight away and you are not paying stockbroking fees on each monthly contribution. You also have the benefit of Pound Cost Averaging that a cash subscription invested once a year does not allow for.

You should also consider if a SIPP is the right investment wrapper. A fund/Share account (perhaps written under trust) would save a huge amount in fees, is unlikely to generate any tax liability in any case and has access that a SIPP doesn't permit (though that may be the whole point!).

Post some more info and I'll help if I can.

Julian

[joestifff]

JulianPH said:

Hi

Are you looking to buy shares or funds?

HL charge for buying/selling shares but not for buying/selling funds, so low cost trackers are most likely your best option as the money gets to work straight away and you are not paying stockbroking fees on each monthly contribution. You also have the benefit of Pound Cost Averaging that a cash subscription invested once a year does not allow for.

You should also consider if a SIPP is the right investment wrapper. A fund/Share account (perhaps written under trust) would save a huge amount in fees, is unlikely to generate any tax liability in any case and has access that a SIPP doesn't permit (though that may be the whole point!).

Post some more info and I'll help if I can.

Julian

Thanks Julian

Your feedback and advice is much appreciated. I am rubbish at any type of investments, I think this is because I am a risk averse accountant who doesn't dare invest any money, and only uses spare cash to overpay the mortgage! (bar a savings pot of 6 months salary, as again, I am a boring accountant).

So my daughter currently has an junior ISA (at a woeful 2.75%) that I pay a chunk into, I set up a junior ISA as not only do I contribute to it, but so does my brother, and his terms were that it had to carry no risk.

But also looked at starting a pension early for her. Would this not be the best idea?

I was looking at buying shares in SXX with it. As everyone at work keeps banging on about it.

My only other advice received was to put it into the most riskiest thing you can find as it is so long term. I needed to sit down after that bit of advice!

[JulianPH]

joestifff said:

Thanks Julian

Your feedback and advice is much appreciated. I am rubbish at any type of investments, I think this is because I am a risk averse accountant who doesn't dare invest any money, and only uses spare cash to overpay the mortgage! (bar a savings pot of 6 months salary, as again, I am a boring accountant).

So my daughter currently has an junior ISA (at a woeful 2.75%) that I pay a chunk into, I set up a junior ISA as not only do I contribute to it, but so does my brother, and his terms were that it had to carry no risk.

But also looked at starting a pension early for her. Would this not be the best idea?

I was looking at buying shares in SXX with it. As everyone at work keeps banging on about it.

My only other advice received was to put it into the most riskiest thing you can find as it is so long term. I needed to sit down after that bit of advice!

No problem!

You may be risk averse, but your daughter has a couple of decades on you (mine has 3 on me!) and a Junior ISA (cash, I presume) earning 2.75% (whilst being an excellent cash return) is not going to do anything much other than beat inflation.

A Stocks & Shares ISA (same tax allowance, same rules, different asset) or a simple investment into funds/shares should deliver much more over 20 years (and even with market risks it shouldn't - though theoretically could - deliver less).

A pension/SIPP would only deliver higher returns because the money is locked in for more than half a century.

Buying shares in Sirius is the absolute other extreme. One company in one sector.

Aim for some middle ground, an equity based portfolio that in ten years time you can move to holding a growing proportion of lower risk assets (bonds, property, physical metals, cash, etc.).

There are loads of ready made versions of these (Vanguard, for example) and this approach should maximise returns and reduce volatility over the initial investment period.

I completely understand you are wanting to do the best for your daughter (as all good Dad's want to do), but risk fre 20 years before access is not going to achieve this.

PM me if you would like to chat further/in more depth. I am happy to share my experience but have to state I am not a financial adviser.

Julian

[anonymous-user]

JulianPH said:

Buying shares in Sirius is the absolute other extreme. One company in one sector.

Bah i have, what's the worst that could happen (well i have got bits elsewhere)
I was chatting to my IFA last week and he recons i give him sleepless nights

[Hobo]

I do something similar for my kids (3 of them).

I put in a bit more than you mention, all funds which I keep an eye on and change when feel beneficial to do so (as it's free to trade funds).

From time to time I also invest a lump sum, or sell funds, and buy them shares (more speculative). I've bought them each £2500 of Sirius shares, and also £2500 of 88e in the hope one of these flies. I'd say it's 75% funds, 25% shares.

I do it through a stocks & shares ISA with HL which are then linked to mine so it's easy to track.

[oldaudi]

Ive got my daughters a SIPP each with HL and a Stocks and Shares Fund in Trust. They have a cash CTF aswell because that was available before these Junior ISAs and a 10 year bond which expires in 2 years for both of them

I also buy SXX for them in their stocks and shares Fund, together with some other funds. Their SIPPs are purely funds with a decent yield being reinvested income. Im hoping for dividends for them in 10 years on t!he SXX.

HL does not charge their full costs for reoccurring purchase based on their monthly savings option so if you put £50 in to SXX ithey don't charge you £8.95 or whatever it is each month, they only charge £1.50 plus don't forget with the SIPP you'll get 20% back from the government paid in too

http://www.hl.co.uk/pensions/vantage-junior-sipp/j...
Equity regular savings £1.50 per stock per month
Available on FTSE 350 shares and eligible investment trusts subject to a minimum of £25 per stock per month.

Edited by oldaudi on Tuesday 10th October 20:19

[CoolHands]

I opened a Vanguard LifeStrategy 100% Equity Accumulation (GBP) with Hargreaves lansdown, £80 a month in a vantage SIPP for my daughter. Over 40 years you need to go for growth!

Just checked my 'fees' are approx £1.15 a month. I presume that's some kind of share dealing fee. Varies by a few pence each time.

http://www.hl.co.uk/funds/fund-discounts,-prices--...

Edited by CoolHands on Tuesday 10th October 21:03

[joestifff]

Julian (and others)

Thanks for all this.

So what I think you are saying is that I should close the ISA with Santander, open up one with H&L as an example, and go for a stocks and shares ISA? and put the money into Vanguard Lifestyle bond?

What about a SIPP as well alongside this? Or not bother? I liked the fact that if I put £40 a month in, the government will put £10 in.

Thanks

p.s. she also has a couple of hundred in premium bonds... you never know!

[oldaudi]

For me we have the ISA to handover when they hit 18. I hope to have them educated on all things financial before then so they don’t blow the lot on drugs and booze. Perhaps towards a house or further education is the idea

The pension is to help them when they start work. They’ll be expected to pay into a pension on what could be a low salary so I want to give them a head start . Plus I don’t think the government pension will be around for much longer.

[joestifff]

oldaudi said:

For me we have the ISA to handover when they hit 18. I hope to have them educated on all things financial before then so they don’t blow the lot on drugs and booze. Perhaps towards a house or further education is the idea

The pension is to help them when they start work. They’ll be expected to pay into a pension on what could be a low salary so I want to give them a head start . Plus I don’t think the government pension will be around for much longer.

This is what I like, and had in my head.

My concern as mentioned earlier is the ISA is not working for itself, and only just making inflation.

I like the idea of the SIPP, as just like you say, a head start. Even £50 a month for say 20 years must make a nice help to a pension.