Best place to put the kids money?

[Woody]

We recently lost my Mom who had savings accounts for our kids.

These couldn't be transferred into my name so the accounts were closed and I have a cheque for both of the kids for around £2k each.

What's the best Bank/investment account to put there money in?

Will be looking at putting regular savings in each month to both of the accounts.

Am I best to open ISA's for the kids?

Have looked at various options but it's all a bit confusing.

If it's any help I have accounts with HSBC, Halifax and NS&I.

[BoRED S2upid]

Halifax do a decent kids savings account a far better rate than they offer us adults and the usual suspects will offer you a kids ISA I have one for each and mirror the funds I'm invested in to keep things simple.

[Woody]

Thanks, I looked at the Halifax 4% account but couldn't work out if I could pay the full amount in to open the account. Also seems to be for 12 months and then it reverts to the lower rate savings account.

[JulianPH]

Sorry to hear about your loss.

What age are the kids? A junior stocks and shares ISA could prove to be a better option if they have a longer investment term ahead of them before accessing the money.

[Woody]

JulianPH said:

Sorry to hear about your loss.

What age are the kids? A junior stocks and shares ISA could prove to be a better option if they have a longer investment term ahead of them before accessing the money.

Thanks, Kids are 6 & 10.
We're looking long term, but I'm never sure about stocks & shares - I've always been a fairly safe investor and taken the lower risk/lower return options.

[JulianPH]

Woody said:

Thanks, Kids are 6 & 10.
We're looking long term, but I'm never sure about stocks & shares - I've always been a fairly safe investor and taken the lower risk/lower return options.

There is plenty of time for them to be in a stock and shares ISA. A balanced managed portfolio (i.e. one run for you) would have exposure to shares, bonds, government gilts, property, gold and cash - so it not just stock and shares.

This should give a massively higher return than cash and should things not go as planned there is sufficient time to recover any losses. As they get older you can move this to a cautious and then defensive portfolio. Then back into cash again if you wish.

Try a couple of years with a 50/50 split between this and cash if you are unsure and want to hedge your (kids) position.

Feel free to PM me if you like. I am not a financial adviser so won't be trying to sell you anything! I do work in the investment management industry though.

[xyz123]

Only thing to note with Kids Isa is that as far as I know, as soon as kids are 18 they have full control over money. I don't want to start a debate in who the money belongs to now but just pointing out something to consider.

[Jon39]

Woody said:

JulianPH said:

Sorry to hear about your loss.

What age are the kids? A junior stocks and shares ISA could prove to be a better option if they have a longer investment term ahead of them before accessing the money.

Thanks, Kids are 6 & 10.
We're looking long term, but I'm never sure about stocks & shares - I've always been a fairly safe investor and taken the lower risk/lower return options.

+1 following JulianPH.

One of the most famous investors in the world has a saying about this. I cannot remember the exact wording, but roughly;

' People might feel comfortable holding cash and cash equivalents.
They shouldn't be, because they have a lousy investment, that is certain to lose money. '

He was of course referring to the continual devaluation of money caused by inflation. Even the recent modest levels of inflation have a surprising effect after a number of years.

Suggest keep proof of the source of your children's money. Gifts from grandparents to grandchildren mean it is taxed as children's money, and not their parents. On small amounts obviously less significant, but you never know. Children do have their own Personal Tax Allowance, and Capital Gains Allowance, in respect of money they have received from other than parents.

[mikeh501]

We've split our kids savings 3 ways.

SIPP - hopefully will grow into something useful when their much much older. Wish id have had something growing for 50 years!
JSIA S&S - Invested in some funds active/passive. They get control at 15 IIRC, and access at 18.
ISA S&S (Wifes name) - Invested in some funds again. We can control when they get this money, sometimes after 18 when they really need it!

[LordHaveMurci]

We have investment trusts for our 2, mainly so we can control how the money is spent rather than them having open access to it at 18.

I'd like to think they'd be sensible with it but we've been saving it for 18yrs & it's a lot of money (to us), so we want to be sure

[VEX]

We are interested in this.

Specifically looking at pensions for our two. Heard an artical on R4 last week that stated £100 per month in to a pension for the first 10years of their life will set them up totally for old age.

Trying to find a calculator that will prove that to me, but if so, this looks a perfect route for us to support them into old age.

If I find anything I'll post it up.

V.

[WindyCommon]

£100/month for their first 10 years will certainly help, but it won't be enough in itself!

[JulianPH]

VEX said:

We are interested in this.

Specifically looking at pensions for our two. Heard an artical on R4 last week that stated £100 per month in to a pension for the first 10years of their life will set them up totally for old age.

Trying to find a calculator that will prove that to me, but if so, this looks a perfect route for us to support them into old age.

If I find anything I'll post it up.

V.

Without charges and with a 7% annual return £100 a month for the first 10 years (with nothing invested after that) would be worth just over half a million at age 60.

£100 a month for 60 years is just over a million on the same basis.

However, what a million or half a million is worth in 60 years time is another matter. So you really need RPI+7% after charges to be properly set up from this. Not impossible though if you take the right risk/reward levels.