Child investment
Discussion
mgsontour said:
Hi everyone, looking for long term suggestions for a nest egg builder for a child? I would prefer for him to avoid taxes upon maturity if possible. Thanks in advance
A JISA seems the obvious starting point. Tax free returns and the ability to access stocks and shares over the long term before the child becomes and adult.A SIPP/Pension is another alternative as with decades of compound growth small investments can grow into substantial funds.
I like a mixture of the two, the first for a more immediate nest egg upon reaching adulthood and the second as the foundation of retirement savings. Both can show the child and they become an adult the value of compound interest and how this will work for them when investing, but equally against them when borrowing.
This lesson, if drilled home, may prove to be more valuable than original financial contribution(s)!
I think a practical approach is that if it is a modest sum such as a couple of thousand a year then the ISA approach takes a lot of beating. It’s going to be about the most tax efficient and well structured. If there is more money than that then the SIPP is an amazing opportunity to boost a child’s opportunities.
With plans like the ISA there is always the risk of a child going loco at 18. The way I look at it from my personal experience is that a small number of children do grow up to be idiots and it is no fault of the parents but in the vast majority of cases that I witnessed the fault lay with bad parenting. I grew up with a large number of school friends having trust funds and almost to a man the ones who went off the rails when they gained access to this money or some inheritance were the ones who had negligent, absent parents or parents with extreme views. As such, I would suggest that any long term savings plan for children should involve an event of cold, hard honesty regarding yourself, the family they are going to grow up into along with their potential peer group.
I also have a view that may be wrong, that it’s important to be very open with children about money to try and teach them the cost and more importantly the value of things while also discussing what their savings are intended for whether it is buying their first home, paying for university etc.
My biggest concern is the peer group that they end up with as teenagers and it was one of the contributing factors to moving them out of central London and to a part of the UK that remains quite old fashioned in its view of money and very non bling. The schools I went to in London are now full of unwanted children with access to enormous sums of money and all the social problems that entails.
With plans like the ISA there is always the risk of a child going loco at 18. The way I look at it from my personal experience is that a small number of children do grow up to be idiots and it is no fault of the parents but in the vast majority of cases that I witnessed the fault lay with bad parenting. I grew up with a large number of school friends having trust funds and almost to a man the ones who went off the rails when they gained access to this money or some inheritance were the ones who had negligent, absent parents or parents with extreme views. As such, I would suggest that any long term savings plan for children should involve an event of cold, hard honesty regarding yourself, the family they are going to grow up into along with their potential peer group.
I also have a view that may be wrong, that it’s important to be very open with children about money to try and teach them the cost and more importantly the value of things while also discussing what their savings are intended for whether it is buying their first home, paying for university etc.
My biggest concern is the peer group that they end up with as teenagers and it was one of the contributing factors to moving them out of central London and to a part of the UK that remains quite old fashioned in its view of money and very non bling. The schools I went to in London are now full of unwanted children with access to enormous sums of money and all the social problems that entails.
We’ve saved £100 a month into the foreign and colonial investment trust junior isa for each of our kids for 11 years now. I appreciate the timing was very fortunate but now there’s enough to cover three years of uni fees. The money is theirs from 18 (a year away in the case of my first child) - I hope I’ve educated them well enough that they use the money for something sensible but if not then I guess I will try and deal with that when it arises.
Premium bonds are also another option - nice for Grandparents to invest in for the grandkids.
Ours have this and we won £25 last month which was a lovely surprize for her.
I would say that investing in a JISA is the best - the worries about the child going loco can be mitigated by simply not sharing the information of the account with them until they reach an age of trust and maturity.
Ours have this and we won £25 last month which was a lovely surprize for her.
I would say that investing in a JISA is the best - the worries about the child going loco can be mitigated by simply not sharing the information of the account with them until they reach an age of trust and maturity.
DonkeyApple said:
I think a practical approach is that if it is a modest sum such as a couple of thousand a year then the ISA approach takes a lot of beating. It’s going to be about the most tax efficient and well structured. If there is more money than that then the SIPP is an amazing opportunity to boost a child’s opportunities.
With plans like the ISA there is always the risk of a child going loco at 18. The way I look at it from my personal experience is that a small number of children do grow up to be idiots and it is no fault of the parents but in the vast majority of cases that I witnessed the fault lay with bad parenting. I grew up with a large number of school friends having trust funds and almost to a man the ones who went off the rails when they gained access to this money or some inheritance were the ones who had negligent, absent parents or parents with extreme views. As such, I would suggest that any long term savings plan for children should involve an event of cold, hard honesty regarding yourself, the family they are going to grow up into along with their potential peer group.
I also have a view that may be wrong, that it’s important to be very open with children about money to try and teach them the cost and more importantly the value of things while also discussing what their savings are intended for whether it is buying their first home, paying for university etc.
My biggest concern is the peer group that they end up with as teenagers and it was one of the contributing factors to moving them out of central London and to a part of the UK that remains quite old fashioned in its view of money and very non bling. The schools I went to in London are now full of unwanted children with access to enormous sums of money and all the social problems that entails.
Agreed with this. With plans like the ISA there is always the risk of a child going loco at 18. The way I look at it from my personal experience is that a small number of children do grow up to be idiots and it is no fault of the parents but in the vast majority of cases that I witnessed the fault lay with bad parenting. I grew up with a large number of school friends having trust funds and almost to a man the ones who went off the rails when they gained access to this money or some inheritance were the ones who had negligent, absent parents or parents with extreme views. As such, I would suggest that any long term savings plan for children should involve an event of cold, hard honesty regarding yourself, the family they are going to grow up into along with their potential peer group.
I also have a view that may be wrong, that it’s important to be very open with children about money to try and teach them the cost and more importantly the value of things while also discussing what their savings are intended for whether it is buying their first home, paying for university etc.
My biggest concern is the peer group that they end up with as teenagers and it was one of the contributing factors to moving them out of central London and to a part of the UK that remains quite old fashioned in its view of money and very non bling. The schools I went to in London are now full of unwanted children with access to enormous sums of money and all the social problems that entails.
I love the idea of my parents putting money into a pension for the children as when the children eventually draw on it (~50 years from now) the parents will be long gone and it will be a lovely legacy for the children to remember them by.
Derek Chevalier said:
Agreed with this.
I love the idea of my parents putting money into a pension for the children as when the children eventually draw on it (~50 years from now) the parents will be long gone and it will be a lovely legacy for the children to remember them by.
Imagine they could put away £3k a year from birth to 21 for the grandchildren that would be one hell of a lot of compound growth in that timeframe then add on another 40 years growth. I love the idea of my parents putting money into a pension for the children as when the children eventually draw on it (~50 years from now) the parents will be long gone and it will be a lovely legacy for the children to remember them by.
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