Childrens savings.

[Terzo123]

One of my kids has a 5 figure sum in a savings account. We have been notified by the bank her interest rate is being dropped to 1%.

In addition she has an old CTF which hasn't been touched in years. I'm not sure what's in this. Maybe 2 or 3k.

I've had a look at changing saving accounts, but the the Interest on offer from other banks isnt great, especially for lump sums.

Child ISA's appear limited to just over 4k, which still leaves me struggling to do anything with the remaining cash, and to be fair I'd probably be looking at transfering the ctf into an ISA first of all.

Does anyone have an idea on the best way to proceed?

Thanks in advance T

[chip*]

You could temporarily park maximum £5k with Nationwide @ 3% (2% if you don't have an eligible account) in the Future Saver account. Looks like they have knocked 0.5% off recently as it used to be 3.5% early this year.

[Condi]

Stocks and shares isa. Ignore it for 5 years or however long it takes her to get to 18. Will go up and down a bit, but should return more than cash over the medium term.

[CorradoTDI]

Help to buy ISA?

[LosingGrip]

CorradoTDI said:

Help to buy ISA?

I really wish I had done this earlier.

Can open it with £1,200 and drip feed £200 a month. If/when they are ready to buy a house. The government top it up by 25%. I think the max you can have is £9k and they add £3k.

If it's a Help to Buy ISA they don't have to use it for a house and can withdraw it all without any fees.

A lifetime ISA can be used for house or pension with the extra 25% added, however if you withdraw it for anything other than house/pension you get a 25% fee (money saving expert explains that it works out more than the 25% extra that they have given you).

[Terzo123]

LosingGrip said:

CorradoTDI said:

Help to buy ISA?

I really wish I had done this earlier.

Can open it with £1,200 and drip feed £200 a month. If/when they are ready to buy a house. The government top it up by 25%. I think the max you can have is £9k and they add £3k.

If it's a Help to Buy ISA they don't have to use it for a house and can withdraw it all without any fees.

A lifetime ISA can be used for house or pension with the extra 25% added, however if you withdraw it for anything other than house/pension you get a 25% fee (money saving expert explains that it works out more than the 25% extra that they have given you).

Can a child take out one of these?

[xyz123]

You may have already looked at it but Virgin money have a account which pays 2.25% upto £25,000. Nationwide account as mentioned us £5000 per account year so after one year you can put another £5k.

Junior ISA is also am option if you want to start building portfolio but personally I don't like the fact that as soon as they turn 18,they have full control of ISA. Everyone to their own but not many 18 year old would know enough about stocks to make an informed decision...

[Mr Pointy]

xyz123 said:

YJunior ISA is also am option if you want to start building portfolio but personally I don't like the fact that as soon as they turn 18,they have full control of ISA. Everyone to their own but not many 18 year old would know enough about stocks to make an informed decision...

Maybe don't tell them about it?

[Terzo123]

Thanks for the replies.

I've taken steps to transfer her CTF into a Jnr ISA.

I'll have a hunt around savings accounts. It may be a case of setting up a couple to take advantage of the better ( still fairly crap) interest rates.

[R33FAL]

over an 18 year period investing in cash is just going to lead to real value erosion once you factor in inflation...

That kind of time frame you need to put money to work in equities.