Investing for my 1 year old son

[seismic22]

Hi all,

This is a bit of a small fry query but I've searched through old threads on here and undertaken some research elsewhere and I just can't seem to decide what's best.

My Son is now 1 year old and I have £1,100 sat in a cash account for him. Going forward I would like to invest this amount in a specific fund within an S&S ISA I will open in my name that I will then drip feed with a limited amount every month for the next 20 years. (Not interested in a JISA).

The question is what fund? I want something global and something I can forget about and just ride out the highs and the lows but that will ultimately average a decent return across its life. Really important is low cost as this is small money and I am banking on compound interest doing the hard work and I don't want fees impacting this if I'm just letting something sit for 20 years. Not keen on anything having much if any UK bias but I am open to being told that's wrong. I also want something that reinvests any dividends.

Been considering these:

Vanguard FTSE All-World ETF

Vanguard FTSE Global All Cap Index Fund

but have also noted this HSBC fund with a 0.10% lower fee:

HSBC FTSE All-World Index Fund C


I suspect some of my phraseology above highlights that I have no experience (or understanding!) with the markets......If anyone could help me out with any advice / suggestions then I'd really appreciate it.

[bitchstewie]

Any of those are fine or Fidelity Index World.

I'd look at funds not ETFs because with ETFs you usually have to buy in whole units whilst with a fund you can buy £100 and get whatever £100 gets you.

Make sure you buy accumulation units and pay attention to the choice of platform as with small regular contributions dealing fees v platform fees could make a significant difference.

Vanguard's own platform is pretty good for small amounts as the platform fee is only 0.15% but of course you can only buy Vanguard funds.

[seismic22]

Thought this thread had gone missing but found it on page 2! Thanks very much, appreciated, didnt know about ETF's and buying whole units.

[xerawh]

Vanguard is a good shout. Intelligent Money on here also offer a low cost proposition but may be more limited in choice. I qualify that by saying my main investments and sons ISA is with them as I like the offering and support available.

Another point to note - if you are investing for your son in an ISA in your name, you won't be able to invest more than the £20k across both of you, and I think (but can't be sure) you can only contribute to another cash isa not a stocks one as your sons one uses that.

What's the hesitation with using the JISA?

[seismic22]

xerawh said:

Vanguard is a good shout. Intelligent Money on here also offer a low cost proposition but may be more limited in choice. I qualify that by saying my main investments and sons ISA is with them as I like the offering and support available.

Another point to note - if you are investing for your son in an ISA in your name, you won't be able to invest more than the £20k across both of you, and I think (but can't be sure) you can only contribute to another cash isa not a stocks one as your sons one uses that.

What's the hesitation with using the JISA?

Hi,

I have read IM's posts on here but have always felt I / anything I have to invest would be far too small time for them...?

For a number of reasons I wont (for the time being anyway) be contributing the full 20k a year in into an ISA for some time yet so the allowance doesnt concern me at present.

The reason for using my ISA rather than a JISA is that I wouldnt have trusted myself to have looked after/spent 20 odd k wisely when I was 18 and regardless of how I bring him up, I dont think I'll 100% trust my son when he's 18 to do the same! If he proves me wrong when hes that age then that will be great and I can still give him the cash from my ISA at that age, it'll just be my choice to do so..

Cheers

[Kickstart]

One of the many attractions of a JISA is that you can encourage grandparents to pay into the account for birthdays/christmas to top up his fund and that may have more appeal to them rather than putting it into your ISA

I had the same concerns when my oldest was young about them wasting the money at 18, but the reality is that the money transfers into an adult ISA and if you explained to them along the line that this is house deposit money or university money etc then certainly my experience and that of friends, is that they see the money that way whereas the cash savings acct with no particular goal was "invested" on summer holidays/drinking at university also my kids have no interest in investing money so I get to play with their pot too.

Big thumbs up for Vanguard - been with them since they opened in the UK and very happy

Just set up the fund and forget it and if and when finances allows you can increase contributions v easily or contribute lump sums

Personally I would go 100% US Equity fund but I am probably biased by its performance since we started investing but you are not going to go wrong with a world tracker

If you are interested, have a look for Bogleheads Wiki (John Bogle was the man who set up Vanguard)

Good luck and enjoy the next 17 years

[daos]

I’m using Hargreaves Lansdown JISA for my son as they don’t charge any fees when using funds. So when combined with the hsbc global tracker you mentioned it’s very low cost. It’s also easy for family members to add to it if they like to. I also like keeping it seperate from my own ISA.

[TGCOTF-dewey]

Alternatively, why not start a pension for him.

60 odd years of compounding - even with a small monthly sum - will see him getting to retire at a reasonable age.

[Colonel Cupcake]

Just be aware that, should you go bankrupt during your childs 17th year, that money is yours, in your ISA and your creditors would get it.

I would really consider setting up his own JISA, just to be safe.

[S1MMA]

I have a Vanguard JISA for both of my girls, invested 100% in a Vanguard S&P500 tracker. Low fees on that.

Easy to setup on the Vanguard website, I looked at lots of options and went for this. The online account management tool/pages are also good, easy to logon and I've had no problems to date.

I also thought about what happens when they turn 18. I like to think that whilst the money may technically be in their name I would still hold the lock and key on who gets what to use on what. The point of the investments is to help them with property or possibly student debt so there will be no handbag/shoe shopping spree on my watch. Famous last words but I doubt they will defy my at 18, they will still need me......

[BoRED S2upid]

I know past performance is no sign of future performance blagh blagh but IMO if a fund has been able to make anything over the last 5 years it stands a good chance over the next 20! Worked for my kids ISAs that annoyingly are up 60% mine are nowhere close.

[bitchstewie]

Honestly don’t overthink it.

Cheap as chips global tracker on a cheap but reputable platform where the costs work for you.

Job done.

[VR99]

My son's JISA is invested into Fidelity Index World (ACC version).....it took me all of 10 seconds to decide and pull the trigger....I suspect that due to the lack of tinkering and a leave it/don't look at it again approach it will comfortably outperform all my other investments

[xerawh]

my strategy - don't tell the kid(s) about the JISA until you want .... omission of facts rather than lying ...

[Mogul]

The JISA provider will start writing directly to the young person before they turn 18 (possibly before they turn 16).

But as most teenagers like their sleep, you’ll have a fighting chance of being able to intercept the post whenever it is delivered!

[okgo]

Mogul said:

The JISA provider will start writing directly to the young person before they turn 18 (possibly before they turn 16).

But as most teenagers like their sleep, you’ll have a fighting chance of being able to intercept the post whenever it is delivered!

I’ll just set up a mail divert

[NowWatchThisDrive]

I've always been a firm advocate for JISAs (together with sound financial education from an appropriate age) and made full of use of them for my kids. But I must admit that seeing a mate's formerly brilliant son go quite unexpectedly off the rails and piss most of his up the wall over the last year has given me pause for thought about what to do in future. My eldest's is currently £110k with five years to go; in terms of potential significance of choices made at 18 I think that's veering towards poor risk vs reward, and as much as I have the best will in the world and know him better than anyone (don't we all?), what's happened with my mate has been an illuminating reminder that you can never be quite sure of anything when dealing with an 18 year old.

[WonkeyDonkey]

I've got a jisa for my son at the moment with vanguard. Performance has been shocking though, coventry building society were offering 4.5% last time I looked which I'm tempted to move it over to.

[duckson]

WonkeyDonkey said:

I've got a jisa for my son at the moment with vanguard. Performance has been shocking though, coventry building society were offering 4.5% last time I looked which I'm tempted to move it over to.

4.95% now.

[birdcage]

I have a JISA for my 2 year old. Regular monthly (modest ish) contribution into Vanguard S&P over 18 years should give him all the money he needs not to need any from me.

I never check it and never will, no point...See you in 16 years!