where to put kids cash

[petemurphy]

so my daughter has 15-20k from various grandparents etc and at the mo its sitting in a kids lloyds bank account.

whats the best thing to do with this cash?

looking at junior isa's are these pointless as she doesnt pay tax on first £1,000 interest i believe? also means its locked away which although is good in that it stops us nicking it, it does mean if there was an emergency then we cant access it.

is there a better bank account or are they pretty much all the same crap interest?

premium bonds similarly pointless or worth it in that at least you may win something and its a bit of fun?

edited to say is marcus the best bank account to put money in?

thanks

Edited by petemurphy on Tuesday 10th March 10:08

[greygoose]

It depends how old your daughter is and when you want her to have the cash available to her. Equities/funds do better long term, albeit the markets are in a mess at the moment, but if you reinvest the proceeds then it could add up over ten or more years.

[Mattt]

If she’s young then I’d be putting into a S&S ISA, good buying opportunities currently!

[anonymous-user]

1. Stock market must be on your radar.

2. If you start a SIPP even a non-taxpayer (i.e. child) gets free money from the government in the form of a tax credit. Invest £2,880 of cash and the child gets £3,600 of investments right from the outset. Also looking at a long time frame and with the stock market way off its peak now may be a great time to start.

3. So with, say, £18k in total you might choose

• £2,800 into SIPP
• £12,000 into stocks & shares ISA
• £3,000 of cash savings - simply because they are easier for a child to understand.

4. If you're nervous about timing you can phase the ISA investment over a period of months/years. On the other hand, now might be a great opportunity.

[bmwmike]

+1 for s and s isa. I've got both my kids (8 and 10) invested in global tech funds. Haven't done it for the tax benefit as such but you never know how they will grow and besides I want to start them off with tax free savings. I'm going to give them access in the next few years well before they can actually access them so they can see them grow/drop.

Also keep meaning to open savings accounts with debit cards for them for pocket money etc but have to go into branch for that - pain.

[Shuvi McTupya]

bmwmike said:

+1 for s and s isa. I've got both my kids (8 and 10) invested in global tech funds. Haven't done it for the tax benefit as such but you never know how they will grow and besides I want to start them off with tax free savings. I'm going to give them access in the next few years well before they can actually access them so they can see them grow/drop.

Also keep meaning to open savings accounts with debit cards for them for pocket money etc but have to go into branch for that - pain.

More parents should do this sort of thing, even if the amounts are small. Well done you

[ClaphamGT3]

Shuvi McTupya said:

bmwmike said:

+1 for s and s isa. I've got both my kids (8 and 10) invested in global tech funds. Haven't done it for the tax benefit as such but you never know how they will grow and besides I want to start them off with tax free savings. I'm going to give them access in the next few years well before they can actually access them so they can see them grow/drop.

Also keep meaning to open savings accounts with debit cards for them for pocket money etc but have to go into branch for that - pain.

More parents should do this sort of thing, even if the amounts are small. Well done you

I think this is pretty normal is it not?

My advice would be to consider a Santander current account with debit card for your children. I opened one last year for our then 11 year-old (the youngest they would allow). What I liked was the emphasis in the account opening process that they put on financial responsibility and the child's need to take accountability for the management of their money.

When I approached my own bank about children's current accounts, they just said "Yes of course, we'll give her an account and card linked to yours" the inference being that they'd just underwrite whatever she chose to spend from my accounts. One of the reasons for setting up the account was to teach her a different approach to money than her mother who, love her dearly as I do, is terrible with money.

[river_rat]

Mattt said:

If she’s young then I’d be putting into a S&S ISA, good buying opportunities currently!

+1

I have Vanguard and Intelligent Money S&S ISA's for both my children (aged 10 and 6) - were both looking very good until a couple of weeks ago, but with long term investment periods I expect them to recover.

[Shuvi McTupya]

ClaphamGT3 said:

I think this is pretty normal is it not?
.

Maybe it is! I never had kids so i am a bit out of touch .

I just remember that as a kid I had no idea about investments and stuff, and didn't have a bank account until i started work.

[rustyuk]

My lad who is 12 has a FTSE Tracker - he doesn't know about it and won't until he is 18. I'm hoping we use it for University costs.

[bmwmike]

rustyuk said:

My lad who is 12 has a FTSE Tracker - he doesn't know about it and won't until he is 18. I'm hoping we use it for University costs.

Not to be pedantic "that guy" but you know it's really a case of "I'm hoping HE uses it for uni" rather than "I'm hoping WE use it" because it's his money. That's why I'm going to give access to my kids to view the balance way before they can actually get their hands on the money because I hope it will encourage them to nuture than burn it but it is at the end of the day their money, not mine.

[ClaphamGT3]

bmwmike said:

rustyuk said:

My lad who is 12 has a FTSE Tracker - he doesn't know about it and won't until he is 18. I'm hoping we use it for University costs.

Not to be pedantic "that guy" but you know it's really a case of "I'm hoping HE uses it for uni" rather than "I'm hoping WE use it" because it's his money. That's why I'm going to give access to my kids to view the balance way before they can actually get their hands on the money because I hope it will encourage them to nuture than burn it but it is at the end of the day their money, not mine.

To that end, one of the most valuable lessons that you can teach your child - and one that I am eternally grateful to my Grandfather for drumming into me - is to understand the difference between capital and income

[Jon39]

greygoose said:

Equities/funds do better long term, albeit the markets are in a mess at the moment, .....

As markets are 'in a mess' now, would it be better to start a long-term investment when the share prices are higher ? -

[TuonoPants]

When my kids were about 5 I emptied most of the cash out of their kiddie bank accounts as it was doing nothing and put it into a couple of junior ISAs (i.e. two ISAs each, hedging my bets), no sophisticated money management involved but just putting the cash where it would hopefully work a bit harder.

They are now 21 and 22 and the ISAs have done well and they have funds for a deposit to get them started on the housing ladder etc. I'm so glad I set the ISAs up, easily the best financial decision I have ever made.

I'm no financial wizard but cash in the bank is dead money so if it's not needed in the next 12 months get it invested.

[petemurphy]

thanks all will go through these suggestions and have a good think. she's 9 if that makes a difference

[petemurphy]

bmwmike said:

+1 for s and s isa. I've got both my kids (8 and 10) invested in global tech funds. Haven't done it for the tax benefit as such but you never know how they will grow and besides I want to start them off with tax free savings. I'm going to give them access in the next few years well before they can actually access them so they can see them grow/drop.

Also keep meaning to open savings accounts with debit cards for them for pocket money etc but have to go into branch for that - pain.

have you looked at a go henry card - mines asking about one and they look quite good

[petemurphy]

Jon39 said:

As markets are 'in a mess' now, would it be better to start a long-term investment when the share prices are higher ? -

may be a dumb question but wouldnt it be better to get shares now whilst prices are low? why would i want them to be higher?

[petemurphy]

TuonoPants said:

When my kids were about 5 I emptied most of the cash out of their kiddie bank accounts as it was doing nothing and put it into a couple of junior ISAs (i.e. two ISAs each, hedging my bets), no sophisticated money management involved but just putting the cash where it would hopefully work a bit harder.

They are now 21 and 22 and the ISAs have done well and they have funds for a deposit to get them started on the housing ladder etc. I'm so glad I set the ISAs up, easily the best financial decision I have ever made.

I'm no financial wizard but cash in the bank is dead money so if it's not needed in the next 12 months get it invested.

have they done well as the shares you have picked have done very well or are even average share gains much better than a bank? have they done a lot better than interest in a bank would have?

my concern as a newbie is that i put her money in a s&s isa and it goes down and i lose her money from her grandparents. plus theres so many funds etc how to chose?

[mikeiow]

I'd also go with checking on Santander accounts - I think they may start at 11, so you may have to wait a couple of years.
They do morph nicely through the years towards learning about money - savings only, then cash car small limit, etc. Since most students end up with them (for the railcard if nothing else!), it is a nice way to get them into understanding finance - this country is WOEFUL at teaching finances to young people, so you can take that job on!!

Outside of that, I'd open some S&S ISA & probably a pension:

Jon39 said:

greygoose said:

Equities/funds do better long term, albeit the markets are in a mess at the moment, .....

As markets are 'in a mess' now, would it be better to start a long-term investment when the share prices are higher ? -

I'm hoping the smiley indicates irony - now is probably as good a time as any to start that, but I would personally drop feed it in over a few months just to balance things out.

Pretty sure the IM funds can be opened for junior ISAs, should the sticky thread on this forum appeal - ours are not juniors, but they do have a pension fund there. I personally like the ethos of IM versus a HL or others - less "big corporate", and clearly very nicely focussed to help PHers with the zero entry cost.
Since pension funds grow over decades, they are ripe ground for investing early into, and not a bad shout for you to start!

Ours also have LISAs (with AJBell), but you have to be 18 for that.
Other options could be Vanguard ISAs (also low cost).

Perhaps stick a grand in premium bonds - the cash will always be there & easily accessible, & whilst it is shoddy interest and borderline gambling, it isn't a bad side option for a small bit - that money could be specifically referenced to as "coming from Gran", etc!

Good luck!

[Jon39]

petemurphy said:

Jon39 said:

As markets are 'in a mess' now, would it be better to start a long-term investment when the share prices are higher ? -

may be a dumb question but wouldnt it be better to get shares now whilst prices are low? why would i want them to be higher?

I did put a smiley face Pete, but did you not realise it was a joke? Perhaps you were making the double bluff.

As a parent, I looked after a small fund for both of my children.
The gifts were from their grandfather, spread over 7 years. There were good tax benefits in those days, for it to be done that way, but all scrapped long ago. You could even reclaim the childrens' tax credit on dividends, because their personal tax allowance was available. The only beneficial aspect which I think still remains, is that gifts from non-parents become the property of the child, so therefore personal allowance and CGT allowances still apply to the child. Therefore no need for an ISA unless the amounts involved are very large.
It all worked out very well and the funds were eventually used for part payments of school fees, some university costs and finally towards house purchase deposits. It was all done using equities because those funds ran for over 25 years. A savings account over that period would be savaged by inflation.

My fairly cautious approach to equities was outlined recently on another topic,
https://www.pistonheads.com/gassing/topic.asp?h=0&...