Best accounts etc for starting child's saving and banking

[strath44]

Hey folks,

looking for any help, suggestions or tried and tested for getting my daughters savings and banking setup (she is 6 months old).

I am unsure of what the best account to open is, we are initially looking at putting away about £100 a month, would it be best to split that.

any suggestions or help appreciated.

[Jockman]

Pension.

Put in £80 per month. The Govt will make it £100.

[fat80b]

Jockman said:

Pension.

Put in £80 per month. The Govt will make it £100.

I've seen this suggestion before and thought about this but how can you be sure that she will ever get to see the benefits of your £80ppm.

The rules could change so much between now and when such that she may never be able to access it when needed or am I missing something about the pension wrapper

Bob

[strath44]

Thanks, this on face value seems a great idea however I would also worry about down the line access and also it is really just setting up me with another pension ultimately (not really a bad thing I guess!!). However I would rather 18 years down the line there was a college or uni pot or whatever savings pot sitting there!

[essayer]

Halifax Kids Regular Saver account - 6% interest - max £100/month

[mini me]

essayer said:

Halifax Kids Regular Saver account - 6% interest - max £100/month

Thats the one I've been using. That 6% is only available for 12 months though I believe. then you transfer out into a lower rate account and start again at whatever a month on the 6% account.

You can tell I'm not very good at financial stuff as I always just let Halifax chuck it into whatever account they do automatically at the end of each year. No idea where the best place to put those current savings would be?

[Jockman]

fat80b said:

I've seen this suggestion before and thought about this but how can you be sure that she will ever get to see the benefits of your £80ppm.

The rules could change so much between now and when such that she may never be able to access it when needed or am I missing something about the pension wrapper

Bob

Bob, I wouldn't let fear of the unknown dictate your investment strategy. Lots will change over the 100 or so years of life expectancy of OP's daughter.

Seldom are changes in this area made retrospectively, so future changes would not impinge on the current 25% immediate return....plus growth (hopefully)....plus compounding.

Indeed, who is to say those changes won't be benign as future Govts realise they cannot support an ageing population?

[Craikeybaby]

I've seen the pension thing mentioned a few times, but whilst it is probably the best on paper it really depends on how the money is intended to be used.

I've been looking at this sort of thing as my wife is having a baby in the summer, the way we see it is that we needed/got some help from our families in our twenties and that is when we would like to be able to help our child/have already given them money to help themselves.

For these longer term savings I'm debating setting up another fund in my S&S ISA for a small monthly amount or a junior ISA. As I don't use my full ISA allowance, I'm swaying towards that option, as whilst the total remains under the ISA limit I can always change my mind, also it means I can decide when to give them the money - 18 years old may be a bit too early.

My wife is going to set something similar up, but possibly in a kids saving account letting have access to the money sooner.

[Jockman]

There is no right or wrong answer - we're all different.

The fact that they will have no access to it until their autumn years is actually one of the reasons I choose the pension route.

[walm]

I use Junior ISAs just shoved into a FTSE all-share tracker.
A few quid here-or-there at 57 won't make a blind bit of difference but a reasonable chunk at 18 could mean the world.
My wife's grandfather did this for her which helped get her on the housing ladder after uni.

[sunil4]

I do both pensions and junior isas for both my kids.

[Ozzie Osmond]

sunil4 said:

I do both pensions and junior isas for both my kids.

^^ Neat.

This really is IMO "best practice" for any parents or grandparents with a bit of cash to spare and who want to do something for the little 'uns. The l-o-n-g timescale of cumulative tax-free returns should turn out to be very valuable indeed.

[hab1966]

For those who have started up a childrens pension -

Which provider did you use?

Did you invest a lump sum or are you making regular contributions?

I was looking to make a payment of £2880 this month and the govt will make it upto £3600. Is it a calendar year that has to pass before i make a similar payment or is it in financial years? I believe payments over £2880 don't attract this top up?

Are people making regular payments each year, or just keeping with one large payment and letting it increase? I appreciate the more i put in the better, but we are also looking at other savings that my daughter (now 4) can access sooner.

Thanks.

[DonkeyApple]

Ozzie Osmond said:

sunil4 said:

I do both pensions and junior isas for both my kids.

^^ Neat.

This really is IMO "best practice" for any parents or grandparents with a bit of cash to spare and who want to do something for the little 'uns. The l-o-n-g timescale of cumulative tax-free returns should turn out to be very valuable indeed.

I added the pension to my children's savings as they are both girls and in reality are likely to only work in a paid environment for as little as ten years or so making them beholden to someone else's pension contributions after a lifetime of unpaid labour.

I was very keen for them to have a small property each for the same reason. It will make them less dependent on others. Although they can't live in them without paying rent, which will assist in avoiding laziness.

I'm actually less keen on them having lump sums in their name. I've seen far too many examples of such being misused or even creating issues within the family and I take the view that they are receiving enough via a good educational start.

If I'd had boys or a boy then I'm not sure as boys don't traditionally get any handouts or inheritance in our family but I think I definitely would have quietly put lump sums away so as to clear their university educational debt once they graduated as I fervently disagree with how we now shackle our youth with debt before they've even started working professionally. Beyond that a good career would give them everything they need and if they wanted to sit on their proverbial all day they wouldn't be doing it as trustafarians.

[Ginge R]

strath44 said:

Hey folks,

looking for any help, suggestions or tried and tested for getting my daughters savings and banking setup (she is 6 months old).

I am unsure of what the best account to open is, we are initially looking at putting away about £100 a month, would it be best to split that.

any suggestions or help appreciated.

For thinking ahead, nice one. You refer to banking, which would imply shorter term goals. What do you want your daughter to use the money for.. education, a house deposit? Is it for a longer term strategy? If so, have you considered investing, instead of saving? Depending on your age and circumstances, you could use any of your own investment ISA allowance and then transfer it across to her periodically (this allows you access and control in the event of needing cash for unforeseen circumstances).

If you are close enough to fifty five, and again, depending on your circumstances, you could consider the merits or otherwise of using your pension wrapper to save for her. Many pension providers will help, I opened personal pension schemes for my kids nearly ten years ago; consequently, they're nicely ahead of the drag curve. Best wait until the budget has been and gone though, Osborne may introduce Retirement ISA for younger savers as the vanguard of changes affecting more of us.

More conventionally, have you considered the Junior ISA?

https://www.gov.uk/junior-individual-savings-accou...

[Jockman]

hab1966 said:

For those who have started up a childrens pension -

Which provider did you use?

Did you invest a lump sum or are you making regular contributions?

I was looking to make a payment of £2880 this month and the govt will make it upto £3600. Is it a calendar year that has to pass before i make a similar payment or is it in financial years? I believe payments over £2880 don't attract this top up?

Are people making regular payments each year, or just keeping with one large payment and letting it increase? I appreciate the more i put in the better, but we are also looking at other savings that my daughter (now 4) can access sooner.

Thanks.

Regular contributions on the Transact platform - pick and choose your own investments or let the IFA do it. My uncle is my IFA.

You will see the Govt input on the transaction page a few weeks after your contribution. Make the contact address yours as well as the email address.

Contributions run on tax years so you can do one on the 5th April then same again on 6th April if you like but then obviously nothing more for a year if you have maxed out. I prefer regular contributions.

You better be quick to set it up as formal ID must be submitted etc so there is a process to adhere to.

If you have an IFA for others things then they tend to do kids stuff at a heavy discount. If I had no IFA then I would be dropping Ginge R an email toute de suite.

[oldaudi]

Ive got two girls, 7 and 9 and I set up various accounts for them when they were younger.

They have a basic account with Nat West for left over pocket money, £1 coins from family etc.
Child Trust fund (cash, not stocks and Shares) started with the £250 government donation and any larger gifts go in there.
I then started the following with Hargreaves Lansdown:
Stocks and Shares Fund Account (not Junior ISA because we have the CTF cash fund) this is held in Trust in my name and will be available for them when they are 18. I make monthly deposits into 3 funds and manage it, take profit re-invest etc.
A SIPP, 3 funds again each with monthly deposits paid in. The advantage of a SIPP is that you get 20% free from the government and if you are a high earner you can complete your tax return and get 40% back. The free 20% is automatically added by HL and reinvested for you.
They also have a 10 year bond Scottish Friendly which I opened for them about 7 years ago (using cash back with Quidco!) , that should mature above expectations so Ill take that and put that into their Stocks and Shares Fund.

I started with lump sums in the Stocks and Shares Trust Fund and the SIPP and now just do monthly minimum into each fund.

The aim is to have various amounts of money available at various points in their life. To help with learning to drive, cars, deposits, education etc. This will hopefully enable them to see the value of money and understand that they need to help out with things they need when they are older. My work colleagues think Im mad, many struggle to pay into their own pensions, nevermind someone elses. Why am im doing this? My dad died and left our family with nothing, not because he couldnt afford it , but because he didnt plan . If I died tomorrow Id want my children to know I did what I could for them financially now.

[walm]

oldaudi said:

A SIPP, 3 funds again each with monthly deposits paid in. The advantage of a SIPP is that you get 20% free from the government and if you are a high earner you can complete your tax return and get 40% back.

You sure about that?
https://www.fidelity.co.uk/investor/pensions/open-...
Fidelity says:
Even though the child is a non tax payer they will still receive full basic rate tax relief on personal contributions, up to £3,600 per tax year. No further tax relief can be claimed by the person contributing to the Junior SIPP.

[Jockman]

walm said:

Even though the child is a non tax payer they will still receive full basic rate tax relief on personal contributions, up to £3,600 per tax year. No further tax relief can be claimed by the person contributing to the Junior SIPP.

That is my understanding.

You cannot claim back the extra tax relief as it is awarded at the child's level ie 20%.

If I'm wrong I will need to go back 6 years on my returns and make an additional claim. I will buy you a pint and takes the wife to the Maldives

[DonkeyApple]

Jockman said:

walm said:

Even though the child is a non tax payer they will still receive full basic rate tax relief on personal contributions, up to £3,600 per tax year. No further tax relief can be claimed by the person contributing to the Junior SIPP.

That is my understanding.

You cannot claim back the extra tax relief as it is awarded at the child's level ie 20%.

If I'm wrong I will need to go back 6 years on my returns and make an additional claim. I will buy you a pint and takes the wife to the Maldives

His wife may not want to go?