What to do with sons Xmas present
Discussion
Gents,
In these days of awful interest rates my father has decided to offload his taxable interest earnings on to the grandkids. Net result my 5yr old has about 7k, currently sat in an account getting 0.5% whilst I try and sort something better out. The better bit is what I'm trying to work out, and I'm struggling.
Any thoughts on what I should do with it? I've looked at kids savings accounts and lots are regular saver types of have low maximum deposit limits. I've also checked out premium bonds but they're hardly great either. I was thinking if perhaps a 250 tracker? But really my knowledge of the markets is very limited.
I don't really see him needing it for at least 10 years and in truth is rather if it sort of looked after itself.
Ideas welcomed from anyone who's had a similar conundrum.
In these days of awful interest rates my father has decided to offload his taxable interest earnings on to the grandkids. Net result my 5yr old has about 7k, currently sat in an account getting 0.5% whilst I try and sort something better out. The better bit is what I'm trying to work out, and I'm struggling.
Any thoughts on what I should do with it? I've looked at kids savings accounts and lots are regular saver types of have low maximum deposit limits. I've also checked out premium bonds but they're hardly great either. I was thinking if perhaps a 250 tracker? But really my knowledge of the markets is very limited.
I don't really see him needing it for at least 10 years and in truth is rather if it sort of looked after itself.
Ideas welcomed from anyone who's had a similar conundrum.
- Mrs says we can't lose him money...
I want some of that action 
My stocks and shares have averaged 9.5% per year over 10 years or more.
They have weathered the storms, so far, as I have been in long term.
A child's ISA would be my bet.
My Fundsmith alone has gained 18% in a year and a half, so including the plummeting stock market of earlier in the year. They must be doing something right.
My stocks and shares have averaged 9.5% per year over 10 years or more.
They have weathered the storms, so far, as I have been in long term.
A child's ISA would be my bet.
My Fundsmith alone has gained 18% in a year and a half, so including the plummeting stock market of earlier in the year. They must be doing something right.
Until you decide why not drop it into Premium Bonds - or at least hold part of it there ongoing.
Children’s pension is a good shout - you’ll get a further 20% on it from the govt up to c£3k per year.
LISA - not sure if kids can get this but worth checking and the govt pay in is very good.
Children’s pension is a good shout - you’ll get a further 20% on it from the govt up to c£3k per year.
LISA - not sure if kids can get this but worth checking and the govt pay in is very good.
I have a similar situation and have been looking at the Nutmeg JISA:
https://www.nutmeg.com/junior-isa
I set up a Nutmeg ISA a while ago on medium risk and was impressed how well it weathered the COVID storm.
https://www.nutmeg.com/junior-isa
I set up a Nutmeg ISA a while ago on medium risk and was impressed how well it weathered the COVID storm.
Shares have to be the best call on that timescale surely. Global tracker fund with as low costs as possible (basically a fund that tries to mimic having a piece of "most" companies in the world. This spreads the risk that one area of the world/part of the economy does less well and so you can buy and forget). Shares are called "higher risk" but time lowers the risk picture. Over 10 years inflation will kill lose a lot of money if just sat in the bank with rubbish interest rates.
I guess it depends on your risk tolerance, shares is one option and you 'might' do well out of them...in the same boat I would go down the more vanilla/boring route of a global or multi-asset index fund. I would also go 100% Equities too given your timeframe for investing and child's age (esp if the timeframe extends to 15+ years) but again depends on your attitude to risk.
I like the fire and forget strategy, it may not yield the best returns but the simplicity means I don't need to think about it;DD every month, job done. This is what I currently do with a VLS 100 albeit it's for myself rather than kids.
I like the fire and forget strategy, it may not yield the best returns but the simplicity means I don't need to think about it;DD every month, job done. This is what I currently do with a VLS 100 albeit it's for myself rather than kids.
Edited by VR99 on Wednesday 30th December 08:53
dasbimmerowner said:
- Mrs says we can't lose him money...
If I had the spare ISA allowance, I'd put it in an iWeb (so very low fees) ISA (so no tax to pay) and use it to buy Fundsmith I (so lowest fee option) accumulator ( so dividends are automatically reinvested within the fund).
Owner's manual for Fundsmith - https://www.fundsmith.co.uk/docs/default-source/do...
Historic returns are not bad : https://www.hl.co.uk/funds/fund-discounts,-prices-...
dasbimmerowner said:
- Mrs says we can't lose him money...
That pretty much means savings or NS&I type products but you aren't going to do much other than maybe preserve the principal.
You could maybe look at lower volatility investments.
Honestly I'd do a bit of homework and think whether you could use this money to get him into some really good habits.
Play around with a compound interest calculator and see what happens if you split the money out over say ten years and drip-feed into an investment if you don't want to throw the whole amount in in one go.
https://www.thecalculatorsite.com/finance/calculat...
xeny said:
dasbimmerowner said:
- Mrs says we can't lose him money...
If I had the spare ISA allowance, I'd put it in an iWeb (so very low fees) ISA (so no tax to pay) and use it to buy Fundsmith I (so lowest fee option) accumulator ( so dividends are automatically reinvested within the fund).
Owner's manual for Fundsmith - https://www.fundsmith.co.uk/docs/default-source/do...
Historic returns are not bad : https://www.hl.co.uk/funds/fund-discounts,-prices-...
Take a look at iWeb and Fidelity as they don't charge a platform/service fee. (Fidelity is free of service charge for all junior SIPP and ISA accounts) which are substantial saving for a long term holding i.e. you can hold investment cheaper than going direct with the investment firm! Other benefits include access to the market / not tied to a single investment product or firm, and they are both financially solid company.
Vanguard has been mentioned above,and you should take a look at their Lifestrategy fund e.g. the LS 20% or LS 40% which are at lower end of the risk scale. You can read up per below link, and opening an account takes a few minutes online.
https://www.vanguardinvestor.co.uk/investing-expla...
Vanguard has been mentioned above,and you should take a look at their Lifestrategy fund e.g. the LS 20% or LS 40% which are at lower end of the risk scale. You can read up per below link, and opening an account takes a few minutes online.
https://www.vanguardinvestor.co.uk/investing-expla...
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