Legacy for grandson
Discussion
My mother passed away last year, leaving her estate to my brother and myself.With my share I have provided for my son and daughter, they might as well have their share now,to stop them asking after my health! However I have allocated 10k for savings for my 7 year old grandson.
Problem is how to best invest it for his future. I thought of 1k cash in his normal savings account.3K in premium bonds and the balance 6k i would invest in trusts etc.I have a dealing account with A J Bell and i can open a dealing accont in his name, controlled by me.I dont want to use a child isa as I don't control it. Any ideas and help please.
Problem is how to best invest it for his future. I thought of 1k cash in his normal savings account.3K in premium bonds and the balance 6k i would invest in trusts etc.I have a dealing account with A J Bell and i can open a dealing accont in his name, controlled by me.I dont want to use a child isa as I don't control it. Any ideas and help please.
mikyman said:
My mother passed away last year, leaving her estate to my brother and myself.With my share I have provided for my son and daughter, they might as well have their share now,to stop them asking after my health! However I have allocated 10k for savings for my 7 year old grandson.
Problem is how to best invest it for his future. I thought of 1k cash in his normal savings account.3K in premium bonds and the balance 6k i would invest in trusts etc.I have a dealing account with A J Bell and i can open a dealing accont in his name, controlled by me.I dont want to use a child isa as I don't control it. Any ideas and help please.
You say you don't want a JISA (kids ISA) due to lack of control-what's the concern. It can not be cashed in before 18. The best think you can do is invest the money in an index such as S&P or global as has been said. Premium Bonds and cash is dead money-that is fact Problem is how to best invest it for his future. I thought of 1k cash in his normal savings account.3K in premium bonds and the balance 6k i would invest in trusts etc.I have a dealing account with A J Bell and i can open a dealing accont in his name, controlled by me.I dont want to use a child isa as I don't control it. Any ideas and help please.
Or open a new account in your name unless you use all of your ISA allowances every year.
Thanks for the replies.Under investment rules a childs isa can only be operated by a parent or guardian. If I opened one in my name and I died it would become part of my estate
.There is no problem with gving money to my son to open a childs isa, but then it becomes a gift to my son,irrespective of the final recipient.
I understand concerns re premium bonds,but they are more of a 'flutter' than serious investment.
Mention has been made of a 'global tracker',but which one?, The financial pages are full of them, all projected as having the best return.
Im sure each person on here will have his own' pet tracker/bond'.
I want to do the best by him as an investment from his great grandma.
.There is no problem with gving money to my son to open a childs isa, but then it becomes a gift to my son,irrespective of the final recipient.
I understand concerns re premium bonds,but they are more of a 'flutter' than serious investment.
Mention has been made of a 'global tracker',but which one?, The financial pages are full of them, all projected as having the best return.
Im sure each person on here will have his own' pet tracker/bond'.
I want to do the best by him as an investment from his great grandma.
AyBee said:
Why can you not control a child's ISA? I opened one for my son the other day and I didn't provide any evidence that he was my son...
You don’t have any say when they get it though come 18 it’s there’s to blow on Coke and hookers or a Porsche. If he controls it he could specify what it’s for. House deposit, Uni, Porsche.., I have opened child trust funds in the past for my nephews. I am able to control investments, as well as contributions and fees. It's a secret - they don't know anything about it. They are with BMO Global Asset Management (F&C).
The get access to it when they turn 18 - after which time I will suggest to them they invest into LISAs.
The get access to it when they turn 18 - after which time I will suggest to them they invest into LISAs.
Or if you want a longer term investment, you can put it in a Junior SIPP which he won't be able to access until pension age (whatever that may be when he gets there - 55 at present).
You pay in £2,880 in each tax year and HMRC will add £720 for free. Not a bad return!
Within the SIPP invest it in a low cost index tracker such as the UBS S&P500, which has low charges. You can do this through fidelity who don't charge anything for Junior SIPPs.
You pay in £2,880 in each tax year and HMRC will add £720 for free. Not a bad return!
Within the SIPP invest it in a low cost index tracker such as the UBS S&P500, which has low charges. You can do this through fidelity who don't charge anything for Junior SIPPs.
mikyman said:
... However I have allocated 10k for savings for my 7 year old grandson.
Problem is how to best invest it for his future. ....
Problem is how to best invest it for his future. ....
Sorry that you have lost your mother.
I have started to allocate grandchildren savings, so far of a similar amount to your figure.
Am using exactly the same method as one generation back, which did work extremely well and eventually produced enough for house deposits.
During the early stages of the pandemic, when share prices had crashed, I selected three large non-cyclical businesses and bought certificated shares in my name. Then transferred them as a gift registered in my sons name, with grandsons initials to create designated accounts. They will be long-term holds. They are now the property of the grandchildren, who have their own CGT allowances, but that is academic for now. No annual fees involved at all and because the purchases were at lows prices, there has already been considerable percentage capital growth and the dividends are flowing. They say start investing at a young age. In one instance, walking has only just been mastered!
In regard to the underlying asset, Im inclined to agree with the several remarks above. Don't really bother with cash. Cash is no longer an investment but a life buffer for adults to bridge the gap between income and long term savings. I wouldn't bother with premium bonds either, not more than £20 quids worth for a laugh. When it comes to funds, you don't want to be fannying about monitoring them as they come and go out of favour or a few years after you've gone the fund is wound up and the money stuck into another fund you'd never have wanted etc. I'd be inclined to just do simple global index trackers. A bit of S&P, maybe the larger block in ftse as the high yeild should work well over a long period and then an Asian index tracker.
mikyman said:
Thanks for the replies.Under investment rules a childs isa can only be operated by a parent or guardian. If I opened one in my name and I died it would become part of my estate
.There is no problem with gving money to my son to open a childs isa, but then it becomes a gift to my son,irrespective of the final recipient.
I understand concerns re premium bonds,but they are more of a 'flutter' than serious investment.
Mention has been made of a 'global tracker',but which one?, The financial pages are full of them, all projected as having the best return.
Im sure each person on here will have his own' pet tracker/bond'.
I want to do the best by him as an investment from his great grandma.
If as you say you want to do the best by him-avoid premium bonds and cash. They will do zero. Stocks are the only way as history has proven..There is no problem with gving money to my son to open a childs isa, but then it becomes a gift to my son,irrespective of the final recipient.
I understand concerns re premium bonds,but they are more of a 'flutter' than serious investment.
Mention has been made of a 'global tracker',but which one?, The financial pages are full of them, all projected as having the best return.
Im sure each person on here will have his own' pet tracker/bond'.
I want to do the best by him as an investment from his great grandma.
okgo said:
Could that not have been done using an JISA wrapper and thus avoiding any tax issues at all? I’m about to open a junior ISA though I’ll probably pick a tracker so perhaps I’m wrong and that buying individual stocks (3 sounds brave!) isn’t possible in the JISA wrapper
I assume that the JISA you are about to open is for your child.Tax rules do not allow a grand parent or anyone else to open a JISA.UrbanAchiever said:
Or if you want a longer term investment, you can put it in a Junior SIPP which he won't be able to access until pension age (whatever that may be when he gets there - 55 at present).
You pay in £2,880 in each tax year and HMRC will add £720 for free. Not a bad return!
Within the SIPP invest it in a low cost index tracker such as the UBS S&P500, which has low charges. You can do this through fidelity who don't charge anything for Junior SIPPs.
This is excellent advice and needs repeating. You pay in £2,880 in each tax year and HMRC will add £720 for free. Not a bad return!
Within the SIPP invest it in a low cost index tracker such as the UBS S&P500, which has low charges. You can do this through fidelity who don't charge anything for Junior SIPPs.
By the sounds of it his mum and dad will be able to help with a house and a small invesent now in a SIPP will be worth an absolute fortune in 50 years.
okgo said:
Could that not have been done using an JISA wrapper and thus avoiding any tax issues at all? I’m about to open a junior ISA though I’ll probably pick a tracker so perhaps I’m wrong and that buying individual stocks (3 sounds brave!) isn’t possible in the JISA wrapper
I have no experience of a junior ISA, but does that money have to be handed over at age 18? I know what I might have blown a surprise windfall on, when I was age 18. My family's system enables the fund to continue on beyond that teenage point. Not sure what tax advantage a junior ISA has, because a fund has to be quite a reasonable size, before any tax is required to be paid.
There are probably people who have ISAs, paying fees, but never ever have any gains which exceed the CGT allowance, so possibly fail to have any benefit at all from the tax wrapper. Admittedly the dividend allowance is lower now though. There was a time when tax was reclaimed on PEP/ISA dividends. Properly tax-free. Mr. Brown changed that for ISAs and pension funds, although he did continue to pretend ISAs are tax-free!
3 stocks not very brave. I have owned part of those same businesses for a long time, so know them well. Three stocks are just the starting point and more will gradually be gifted, to achieve a proper risk balance. The brave part was me buying cheap shares, just when we thought the pandemic was going to completely halt life as we knew it. Everyone else seemed to be panic selling shares at that time.
Edit - I had to chuckle at the idea of starting a savings fund for a grandchild say aged 1, and then that money cannot be handed over until the family member retires from their career. If they are not financially comfortable by then and therefore no longer have any need for the money, they never will be.
Edited by Dewi 2 on Wednesday 16th February 22:40
VWRL is a global index fund which is basically a giant mix of companies (about 3000 of them).
Its considered a good global spread of shares. It also has fairly low fees.
So its quite an attractive "fire and forget" investment.
If you are more keen on the UK and think the UK will do well then VLS100 is another good option.
VUSA is good if you think the USA will do well.
As for the SIPP thing.
Its a great idea. BUT - imvho its really only suitable for children who already have access to secure finances. Because the investment term is so long you are basically taking the money and locking it away for 55-60 years with no chance of access.
Obviously everyone's situation is different, and IANAFA.
Its considered a good global spread of shares. It also has fairly low fees.
So its quite an attractive "fire and forget" investment.
If you are more keen on the UK and think the UK will do well then VLS100 is another good option.
VUSA is good if you think the USA will do well.
As for the SIPP thing.
Its a great idea. BUT - imvho its really only suitable for children who already have access to secure finances. Because the investment term is so long you are basically taking the money and locking it away for 55-60 years with no chance of access.
Obviously everyone's situation is different, and IANAFA.
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