Savings for a child.
Discussion
Hey PH.
MY first child is due in April and we're wanting to start a savings account for her. We're looking to save about £10 a week until she's 18 but unsure of the best way to go about it. A quick Google search suggests simply opening a childs savings account but is this the best option?
Thanks.
MY first child is due in April and we're wanting to start a savings account for her. We're looking to save about £10 a week until she's 18 but unsure of the best way to go about it. A quick Google search suggests simply opening a childs savings account but is this the best option?
Thanks.
If you're happy with it becoming their money as soon as they turn 18, a Junior stocks and shares ISA invested in something like Vanguard Lifestrategy range is a decent shout. If you want to retain control so you can decide when they should receive the cash, keep it in your own ISA.
If you're not open to any risk, child savings account is OK but won't see much growth. NS&I childrens bonds will see a few % return.
If you're not open to any risk, child savings account is OK but won't see much growth. NS&I childrens bonds will see a few % return.
I run a pension for all my stepchildren. The 3 grandkids got a pension within 4 weeks of their birth.
I put in £80 per month into all 7 pots and the govt tops this up to £100.
My eldest grandson is 5 and his pot is around the £7,700 mark. He lost a wee bit in China but I compensated him with some Star Wars lego
I put in £80 per month into all 7 pots and the govt tops this up to £100.
My eldest grandson is 5 and his pot is around the £7,700 mark. He lost a wee bit in China but I compensated him with some Star Wars lego
Jockman said:
I run a pension for all my stepchildren. The 3 grandkids got a pension within 4 weeks of their birth.
I put in £80 per month into all 7 pots and the govt tops this up to £100.
My eldest grandson is 5 and his pot is around the £7,700 mark. He lost a wee bit in China but I compensated him with some Star Wars lego
Someone else with kids SIPP's ! I have no idea why more people don't do it...I put in £80 per month into all 7 pots and the govt tops this up to £100.
My eldest grandson is 5 and his pot is around the £7,700 mark. He lost a wee bit in China but I compensated him with some Star Wars lego
Cheib said:
Jockman said:
I run a pension for all my stepchildren. The 3 grandkids got a pension within 4 weeks of their birth.
I put in £80 per month into all 7 pots and the govt tops this up to £100.
My eldest grandson is 5 and his pot is around the £7,700 mark. He lost a wee bit in China but I compensated him with some Star Wars lego
Someone else with kids SIPP's ! I have no idea why more people don't do it...I put in £80 per month into all 7 pots and the govt tops this up to £100.
My eldest grandson is 5 and his pot is around the £7,700 mark. He lost a wee bit in China but I compensated him with some Star Wars lego
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
rsbmw said:
If you're happy with it becoming their money as soon as they turn 18, a Junior stocks and shares ISA invested in something like Vanguard Lifestrategy range is a decent shout. If you want to retain control so you can decide when they should receive the cash, keep it in your own ISA.
If you're not open to any risk, child savings account is OK but won't see much growth. NS&I childrens bonds will see a few % return.
Pretty much this.If you're not open to any risk, child savings account is OK but won't see much growth. NS&I childrens bonds will see a few % return.
As I am not maximising my ISA each year, I set up a separate fund (Vanguard Lifestrategy) within my own ISA and make monthly contributions. I will reasses this as it approaches the annual limit for a child ISA, as up until that point I could just transfer it to a Junior ISA anyway. My wife has set up an regular child savings account in his name and also contributes to that.
Whist setting up a pension for him would have been the most bang per buck, I want to help him get set up for life, so to be able to access the money in his early twenties. He'll have his whole adult life to set himself up for retirement.
walm said:
oyster said:
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
How does that work?Genuine question!
Craikeybaby said:
so to be able to access the money in his early twenties
I don't think I'd have spent a windfall wisely in my early twenties. Few 20 somethings think about pension provision or investments. Well into their 20s, maybe the less work hungry mobile ones will consider property & settling down.SunsetZed said:
walm said:
oyster said:
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
How does that work?Genuine question!
Behemoth said:
Craikeybaby said:
so to be able to access the money in his early twenties
I don't think I'd have spent a windfall wisely in my early twenties. Few 20 somethings think about pension provision or investments. Well into their 20s, maybe the less work hungry mobile ones will consider property & settling down.Edited by Craikeybaby on Tuesday 15th November 13:26
SunsetZed said:
walm said:
oyster said:
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
How does that work?Genuine question!
oyster said:
1. Because they are 60-odd years from benefitting from it.
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
1. Great. That's the whole idea.2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
2. Much of which will no longer be available to them anyway. The choice of higher rate tax relief or free contributions. Tough choice.
3. Is it the parent's contribution level that matters?
Jockman said:
oyster said:
1. Because they are 60-odd years from benefitting from it.
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
1. Great. That's the whole idea.2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
2. Much of which will no longer be available to them anyway. The choice of higher rate tax relief or free contributions. Tough choice.
3. Is it the parent's contribution level that matters?
EddieSteadyGo said:
Well I for one think you're a very nice parent/grandparent to go to the effort of making those arrangements. Good on you.
+1.Intergenerational planning can never be started, or considered, too soon. Most clients who do it get a lot of pleasure and comfort out of it, and it puts 'things' in perspective.
We have (Fidelity I think) Investment Trusts for our two, probably £10-12k combined at the moment.
Our lad also has a CTF (how pointless were they?!), that'll be accounted for when he gets his share of the Investment Trust as his older sister missed out on the CTF.
I was determined that we needed to retain control of the money so we can make sure it's used sensibly, for our kids it'll be a one off opportunity (until I die anyway!).
Our lad also has a CTF (how pointless were they?!), that'll be accounted for when he gets his share of the Investment Trust as his older sister missed out on the CTF.
I was determined that we needed to retain control of the money so we can make sure it's used sensibly, for our kids it'll be a one off opportunity (until I die anyway!).
Jockman said:
oyster said:
1. Because they are 60-odd years from benefitting from it.
2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
1. Great. That's the whole idea.2. Because you're reducing their future ability to offset higher rate tax and benefit from employer inducements (such as contribution matching or saving employee NICs on salary sacrifice schemes)
3. Because the parent may already be at the limit of pension contributions.
2. Much of which will no longer be available to them anyway. The choice of higher rate tax relief or free contributions. Tough choice.
3. Is it the parent's contribution level that matters?
1 and 2 are negated somewhat by the fact they will hopefully have had at least 25 years of compounding before they would even think about making contributions themselves. Making a judgement for an investment now on the basis of them potentially being a higher rate taxpayer (most of the population isn't) or having a meaningful employee pension scheme is fairly ridiculous. Given costs there are likely to be less and less employee schemes that even exist.
And to the point that they can't access it for sixty years...when most people have to start making pension contributions in their late 20's (if they can afford to) my kids will hopefully not have to think about it for a few more years. So it will still ease there cash-flow burden when they are much younger.
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