Juinor ISAs - a good idea?

[Legend83]

I was musing about ways of saving for our childrens future and it came to my attention that as I have a Halifax ISA I could get 6% on current Junior ISAs.

Great I think, a brilliant rate.

However, I note two things:

a) once placed, the money cannot be drawn on until they are 18 (nearly 2 now).

Now if I were to go down the ISA route I would accept that efectively this money does not exist but the little niggle in the back of my mind keeps reminding me that bad things can happen and the sums I am thinking of investing would be useful in an emergency.

b) once my children turn 18, the money is legally theirs.

Now, with all the best will in the world, I don't know how my children are going to turn out! I would hope to teach them to be wise with their money but I don't recall being very conservative when I was 18...

So, what are people's thoughts. I can get over the first issue, but the idea of my little ones becoming irresponsible young adults and blowing their fund on coke and hookers worries me.

[Zigster]

Legend83 said:

I was musing about ways of saving for our childrens future and it came to my attention that as I have a Halifax ISA I could get 6% on current Junior ISAs.

Great I think, a brilliant rate.

However, I note two things:

a) once placed, the money cannot be drawn on until they are 18 (nearly 2 now).

Now if I were to go down the ISA route I would accept that efectively this money does not exist but the little niggle in the back of my mind keeps reminding me that bad things can happen and the sums I am thinking of investing would be useful in an emergency.

b) once my children turn 18, the money is legally theirs.

Now, with all the best will in the world, I don't know how my children are going to turn out! I would hope to teach them to be wise with their money but I don't recall being very conservative when I was 18...

So, what are people's thoughts. I can get over the first issue, but the idea of my little ones becoming irresponsible young adults and blowing their fund on coke and hookers worries me.

My wife and I had the same discussion around Child Trust Funds - she said just put in the voucher from the Govt and nothing else due to coke and hookers risk. In the end I put in the max amount for a couple of years and then stopped altogether. The children each have a few £k in their CTFs which should hopefully grow to a decent sum at 18 (enough for a decent car and insurance, or maybe a gap year). If they blow it on coke and hookers, I haven't lost too much and they will hopefully learn a lesson about how much easier it is to spend money than to earn it!

If you put in the full amount each year (it's only £1,200 with CTFs but isn't it £3,600 with Junior ISAs?) then it really would be a hefty sum when they hit 18 - at a guess around £100k-£150k allowing for reasonable investment returns so maybe about £75k-£100k in real terms once inflation is allowed for. Great if they want to use it for university fees, ****ing terrifying if they are less responsible! Unfortunately I can only guess what I would have done with £100k at age 18.

[Legend83]

My one thought was is there a legal requirement for me to tell the children that these ISAs exist once they hit 18?

If I could keep it quiet until I was satisfied they were upstanding members of the community then that would ease my fears!

[Welshbeef]

Don't tell them.
They would be none the wiser especially if you get online statements.


Giving a child that much cash that young is risky - that said if say they really want to go to Uni or buy a house then it might be an idea to let them have it.

25 should be old enough
Think Uni fees (not all go nor want to go)
House Deposit
Wedding costs
Business set up costs
Or hookers and coke .

Being debt free or having a tidy cash lump sum at that age is enviable though sometimes for some individuals its better for them to be given nothing and earn it all themselves

[Gretchen]

Legend83 said:

My one thought was is there a legal requirement for me to tell the children that these ISAs exist once they hit 18?

If I could keep it quiet until I was satisfied they were upstanding members of the community then that would ease my fears!

I put some money away when my eldest was born, and continued to do so for ten years. I always thought I'd hold off informing him about it until I thought he was sensible enough to handle it. He's nearly 19 now and I still haven't felt it necessary to tell him. He's working and studying full time and earning decent money himself. Saving for a place of his own...Yet last week he opened a letter addressed to him which stated details of the account and monies held. He was in shock and questioned where the money came from. I wasn't happy.

It was a good idea at the time, but I'm not sure it's possible to keep things secret once they reach 18.

[hbzboy]

I started a virgin pension fund for my kids when they were born (right move I don't know) started off paying 20 a month in to each and asked to increase it by 10% per annum.

Gives them an option after you decide when they can afford to pay towards it themselves and continue based on present worth and forcasts if they want to, or a lump sum to buy in to the current employers fund (again I am not sure this is the best idea) or an annuity.

Means they can't get grubby hands on it and maybe secures something for when they are a bit more savvy?

[Soir]

We have 2 & 4yr olds, they both have bank accounts which I have control over until they are 18.
We have put money in ourselves plus extra Xmas or birthday monies.

I've recently put most of it into premium bonds in their names but again with full control when they are 18.

My plan is for them not to find out about the bonds. Cash them in when they are 18 then sit on the money until they are at least 21.

Can't think of one person I've ever known who would have spent wisely at 18.
Hard part will be keeping it from them

[Anthony Micallef]

They were talking about investing for your children on Radio 4 yesterday. It may be of interest to you http://www.bbc.co.uk/programmes/b01qwglm

[Legend83]

Thanks all for the opinions.

I still like the idea of the ISA, particularly the current rate of interest I can achieve through Halifax with no risk.

I think I am willing to risk trying to keep it from them as long as I think is necessary.

[tickious]

A legal aside, I'm saving a bit for my 18 month old. But can't get 6% for myself. What's to stop me from saving a little extra and say putting a grand into the same isa for myself and removing it say when I'm ready to get myself another track Day car?

[voicey]

I also opened a stakeholder pension for my daughter (2.5 now). We put in the max (£2,880 + tax relief = £3,600) in her first year, nothing in the second year and the max this year. In April I will make the min monthly payments allowed (£16 pm = £20 with tax relief) in order to pay her account charges.

I'm hoping it'll give her a leg up in the future and encorage her to be a saver rather than a spender (unlikely given her mother but it's worth a shot....)

[Welshbeef]

voicey said:

I also opened a stakeholder pension for my daughter (2.5 now). We put in the max (£2,880 + tax relief = £3,600) in her first year, nothing in the second year and the max this year. In April I will make the min monthly payments allowed (£16 pm = £20 with tax relief) in order to pay her account charges.

I'm hoping it'll give her a leg up in the future and encorage her to be a saver rather than a spender (unlikely given her mother but it's worth a shot....)

I would say as soon its affordable buy a buy to let then 20 years later he or she will have a house debt free. That's a massive weight off them and to you too if you have to act as bank of mum and dad.

Problem is if you keep popping them out and you cannot afford another pension fund you cannot move the funds out so its hard luck to the others.