Putting money aside for kids
Discussion
Apologies if this has been done recently already?
Lets say i have two kids, 7 and 5, and so far only putting money aside for the eldest because we setup a CTF with the (then) government contribution. Also has a NSANDI bond at 2.5% which is fixed till June 2020 but haven't been using it.
Originally my plan for youngest was to match whatever the eldest came out with. I think that might be foolish over a long run, and perhaps unfair.
So I want to set something up now for both on a pro rated equal footing. The CTF can go as the return seems poor (haven't checked in a while).
Curious what other folks are doing? Child ISA ? In cash or stocks ? Lump sum and leave it or drip money in?
Anyone worried that the kid gets access at 18 without any parental oversight?
Thanks
Mike
Lets say i have two kids, 7 and 5, and so far only putting money aside for the eldest because we setup a CTF with the (then) government contribution. Also has a NSANDI bond at 2.5% which is fixed till June 2020 but haven't been using it.
Originally my plan for youngest was to match whatever the eldest came out with. I think that might be foolish over a long run, and perhaps unfair.
So I want to set something up now for both on a pro rated equal footing. The CTF can go as the return seems poor (haven't checked in a while).
Curious what other folks are doing? Child ISA ? In cash or stocks ? Lump sum and leave it or drip money in?
Anyone worried that the kid gets access at 18 without any parental oversight?
Thanks
Mike
drainbrain said:
Edgey Kayshun (of one kind or another)
Always wondered about this.......I'm not being facetious here, but why donate money to service student debt?Wouldn't you and your child be better off if you just gifted them a deposit to a house in the future, rather than fund university? Uni debt while on the surface seems a lot, the interest rate makes it easily manageable, compared to say paying for their fees, then making them save for a deposit post uni.
lukefreeman said:
drainbrain said:
Edgey Kayshun (of one kind or another)
Always wondered about this.......I'm not being facetious here, but why donate money to service student debt?Wouldn't you and your child be better off if you just gifted them a deposit to a house in the future, rather than fund university? Uni debt while on the surface seems a lot, the interest rate makes it easily manageable, compared to say paying for their fees, then making them save for a deposit post uni.
Some good points here thanks a lot. The take away I've got at moment is... what is the objective.. university, house deposit, lump sum.. etc
My 3 had CTF's. I hadn't paid attention of them for a while. On checking, they ranged from not very good to rubbish.
I have now (very easily and painlessly) transferred them to JISA's with BestInvest. Once there, I have invested their money into a range of index type funds that seem to average around 9% or better.
I have ISA with BestInvest too, and i can link my kids accounts to mine, so i can now see all our live investments on their web portal. its great to see exactly where the money is invseted and how it is performing.
I have now (very easily and painlessly) transferred them to JISA's with BestInvest. Once there, I have invested their money into a range of index type funds that seem to average around 9% or better.
I have ISA with BestInvest too, and i can link my kids accounts to mine, so i can now see all our live investments on their web portal. its great to see exactly where the money is invseted and how it is performing.
drainbrain said:
Edgey Kayshun (of one kind or another)
Then you really don't need to bother trying to do it the other way.
Get it right they'll just laugh at you and tell you to spend it on yourself.
An interesting approach. My son had the "benefit" of an expensive education. I asked him a couple of years ago, would you have preferred to have the education or the cash spent on it. He's not particularly materialistic, but said that on reflection he would rather take the cash. Then you really don't need to bother trying to do it the other way.
Get it right they'll just laugh at you and tell you to spend it on yourself.
Education can take many many forms, and certainly doesn't have to be formal or academic although it certainly can be. But it inevitably opens a gateway to opportunity which, again, can take many many forms.
I think it's also a mistake to over focus on childrens' material future. In the final analysis I'm sure we'd prefer our kids to feel as adults that they were fulfilled and satisfied rather than merely well off, although the two needn't be mutually exclusive.
My personal observation is that there's also a large chunk of "what's for you won't go by you" in this life, regardless of how others try to 'tee it up' for their kids.
But obviously it's very nice to discover your parents have tucked away a nest egg to give you a good direction at one of life's critical junctions. In my case, it was an endowment my old single parent da (a special ed. teacher) had paid into till it matured when I was 21. I really really didn't need it and convinced him to keep it for himself instead. It wasn't hard to do because he was well aware I'd have just squandered it anyway. I suppose that's the biggest 'risk' of putting money aside for kids.
I think it's also a mistake to over focus on childrens' material future. In the final analysis I'm sure we'd prefer our kids to feel as adults that they were fulfilled and satisfied rather than merely well off, although the two needn't be mutually exclusive.
My personal observation is that there's also a large chunk of "what's for you won't go by you" in this life, regardless of how others try to 'tee it up' for their kids.
But obviously it's very nice to discover your parents have tucked away a nest egg to give you a good direction at one of life's critical junctions. In my case, it was an endowment my old single parent da (a special ed. teacher) had paid into till it matured when I was 21. I really really didn't need it and convinced him to keep it for himself instead. It wasn't hard to do because he was well aware I'd have just squandered it anyway. I suppose that's the biggest 'risk' of putting money aside for kids.
drainbrain said:
Education can take many many forms, and certainly doesn't have to be formal or academic although it certainly can be. But it inevitably opens a gateway to opportunity which, again, can take many many forms.
I think it's also a mistake to over focus on childrens' material future. In the final analysis I'm sure we'd prefer our kids to feel as adults that they were fulfilled and satisfied rather than merely well off, although the two needn't be mutually exclusive.
My personal observation is that there's also a large chunk of "what's for you won't go by you" in this life, regardless of how others try to 'tee it up' for their kids.
But obviously it's very nice to discover your parents have tucked away a nest egg to give you a good direction at one of life's critical junctions. In my case, it was an endowment my old single parent da (a special ed. teacher) had paid into till it matured when I was 21. I really really didn't need it and convinced him to keep it for himself instead. It wasn't hard to do because he was well aware I'd have just squandered it anyway. I suppose that's the biggest 'risk' of putting money aside for kids.
This is why we decided on Investment Trusts for our two, CTF's or JISA's become theirs at 16, the IT remains in our name & we control how & when that money is spent.I think it's also a mistake to over focus on childrens' material future. In the final analysis I'm sure we'd prefer our kids to feel as adults that they were fulfilled and satisfied rather than merely well off, although the two needn't be mutually exclusive.
My personal observation is that there's also a large chunk of "what's for you won't go by you" in this life, regardless of how others try to 'tee it up' for their kids.
But obviously it's very nice to discover your parents have tucked away a nest egg to give you a good direction at one of life's critical junctions. In my case, it was an endowment my old single parent da (a special ed. teacher) had paid into till it matured when I was 21. I really really didn't need it and convinced him to keep it for himself instead. It wasn't hard to do because he was well aware I'd have just squandered it anyway. I suppose that's the biggest 'risk' of putting money aside for kids.
My parents also put aside (a very small amount of) money in endownments for myself & my 3 siblings, like you I persuaded my Mum to keep mine as I didn't need it at 21 though I did have a small one at 16 which bought me a suit for job interviews!
You want to be investing in tax free wrappers, so for children that's JISAs and pensions. The CTF market is dead so convert the CTF to a JISA. Cash or S&S depending on your preference (most would say to go for S&S).
If you want to make further contributions then it's up to you to choose which wrapper - a good provider will offer identical investment options in either.
(J)ISAs: instant access, may be a good thing, may be a bad thing as child gets full ownership when they're 18. Up to £4080 can go in each tax year until they're 18.
Pensions: you can contribute up to £2880 each tax year and they get a 20% topup from HMRC to make it £3600. Locked away until they're aged 55 minimum, unless they're stupid and access it early and pay the massive penalties.
From aged 16 the child also gets the full £20,000 ISA allowance but only to go in a cash ISA until they're 18. At that point it could be converted to a S&S ISA so worth using their annual allowance, if you have the spare cash.
Remember that on any investment vehicle other than (J)ISA & pension, if the money to seed it came from the parents then any income over £100 has to pay income tax at the parental rate
If you want to make further contributions then it's up to you to choose which wrapper - a good provider will offer identical investment options in either.
(J)ISAs: instant access, may be a good thing, may be a bad thing as child gets full ownership when they're 18. Up to £4080 can go in each tax year until they're 18.
Pensions: you can contribute up to £2880 each tax year and they get a 20% topup from HMRC to make it £3600. Locked away until they're aged 55 minimum, unless they're stupid and access it early and pay the massive penalties.
From aged 16 the child also gets the full £20,000 ISA allowance but only to go in a cash ISA until they're 18. At that point it could be converted to a S&S ISA so worth using their annual allowance, if you have the spare cash.
Remember that on any investment vehicle other than (J)ISA & pension, if the money to seed it came from the parents then any income over £100 has to pay income tax at the parental rate
Nationwide are offering 3% on a junior isa, which could provide you with a simple starting point:
http://www.nationwide.co.uk/products/savings/junio...
http://www.nationwide.co.uk/products/savings/junio...
Both of my 2 have had CTFs since day 1 under old gordons scheme, and we had 2 savings accounts with halifax as well.
Basically the CTFs were complete crap, bad value and high charges for what is basically a passive tracker - and a tracker which is really poor with the halifax/hbos.
I've recently moved the CTFs into JISA on the HL platform and invested them into a fairly diverse portfolio which ill fiddle with over the years. The process was painless tbh. Remember the money is theirs from 16, and you couldnt stop them spunking it up the wall if they wished to.
The savings accounts i've combined and put into a S&S ISA in the wife's name again invested in a similar way. We will likely keep this back from the kids until they actually need it - house, whatever etc.
.... and today i've just setup 2 x SIPPs for them. Gonna put a few K in each, and hopefully the powers of compounding in some cheap trackers will be a good kickstart to their pensions way way down the line.
Basically the CTFs were complete crap, bad value and high charges for what is basically a passive tracker - and a tracker which is really poor with the halifax/hbos.
I've recently moved the CTFs into JISA on the HL platform and invested them into a fairly diverse portfolio which ill fiddle with over the years. The process was painless tbh. Remember the money is theirs from 16, and you couldnt stop them spunking it up the wall if they wished to.
The savings accounts i've combined and put into a S&S ISA in the wife's name again invested in a similar way. We will likely keep this back from the kids until they actually need it - house, whatever etc.
.... and today i've just setup 2 x SIPPs for them. Gonna put a few K in each, and hopefully the powers of compounding in some cheap trackers will be a good kickstart to their pensions way way down the line.
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