Kids money (ISA or SIPP)
Discussion
Just wondered what peoples opinions are on whether if you've gifted your young children money, you are putting it into an ISA or a SIPP (or a combination).
I have three children (13, 17 & 19) and each have an ISA with a decent amount in it, say for example 20k. I'm considering splitting the monies, and putting part of it into a SIPP for their later lives, as they may be tempted to withdraw the monies from the ISA and even putting 5k into the SIPP at this stage would see a pension worth likely millions based on a annual return of say 20% over the next 35 years.
I appreciate there is no real financial benefit to the SIPP over the ISA, and even draw back on access to funds, but would like the kids to have a largish nest egg available at 55 courtesy of myself and the wife, rather than maybe just using it all for a house deposit or new car etc earlier.
Thoughts .... ?
I have three children (13, 17 & 19) and each have an ISA with a decent amount in it, say for example 20k. I'm considering splitting the monies, and putting part of it into a SIPP for their later lives, as they may be tempted to withdraw the monies from the ISA and even putting 5k into the SIPP at this stage would see a pension worth likely millions based on a annual return of say 20% over the next 35 years.
I appreciate there is no real financial benefit to the SIPP over the ISA, and even draw back on access to funds, but would like the kids to have a largish nest egg available at 55 courtesy of myself and the wife, rather than maybe just using it all for a house deposit or new car etc earlier.
Thoughts .... ?
If you could share where you are getting consistent 20% returns I'd be grateful!
A couple of points - I am not sure you'd be able to withdraw for the 19 year old without their consent and as the money is already in a tax efficient product there is no advantage in putting in a pension
In fact that will pay tax on withdrawals in most cases.
You will be able to invest in similar products within the ISA.
The fact that they can access it is both a positive and a negative depending on the situation.
A couple of points - I am not sure you'd be able to withdraw for the 19 year old without their consent and as the money is already in a tax efficient product there is no advantage in putting in a pension
In fact that will pay tax on withdrawals in most cases.
You will be able to invest in similar products within the ISA.
The fact that they can access it is both a positive and a negative depending on the situation.
We've got an ISA and a SIPP for our 7 year old.
We pay ~80% into the ISA and 20% into the SIPP, not really counting on the SIPP being of much vaue unless she pays into it herself as she gets older, but more of a way to hopefully teach her about managing finances, investing for her future and demonstrating the effects of interest compounding, who knows where the world will be in another 50 odd years when she's ready to access it.
We pay ~80% into the ISA and 20% into the SIPP, not really counting on the SIPP being of much vaue unless she pays into it herself as she gets older, but more of a way to hopefully teach her about managing finances, investing for her future and demonstrating the effects of interest compounding, who knows where the world will be in another 50 odd years when she's ready to access it.
Gary29 said:
We've got an ISA and a SIPP for our 7 year old.
We pay ~80% into the ISA and 20% into the SIPP, not really counting on the SIPP being of much vaue unless she pays into it herself as she gets older, but more of a way to hopefully teach her about managing finances, investing for her future and demonstrating the effects of interest compounding, who knows where the world will be in another 50 odd years when she's ready to access it.
That's kind of my thinking, as obviously they will follow its growth and hopefully continue to pay in when they start work having seen the effect of compound interest, which is not something my parents really ever thought about.We pay ~80% into the ISA and 20% into the SIPP, not really counting on the SIPP being of much vaue unless she pays into it herself as she gets older, but more of a way to hopefully teach her about managing finances, investing for her future and demonstrating the effects of interest compounding, who knows where the world will be in another 50 odd years when she's ready to access it.
Nicetobenice said:
If you could share where you are getting consistent 20% returns I'd be grateful!
A couple of points - I am not sure you'd be able to withdraw for the 19 year old without their consent and as the money is already in a tax efficient product there is no advantage in putting in a pension
In fact that will pay tax on withdrawals in most cases.
You will be able to invest in similar products within the ISA.
The fact that they can access it is both a positive and a negative depending on the situation.
Not my place to give you advise, but if you haven't been getting 20% returns on average for the past fair few years then you've been missing out massively, and see lots of opportunity for similar growth moving forward.A couple of points - I am not sure you'd be able to withdraw for the 19 year old without their consent and as the money is already in a tax efficient product there is no advantage in putting in a pension
In fact that will pay tax on withdrawals in most cases.
You will be able to invest in similar products within the ISA.
The fact that they can access it is both a positive and a negative depending on the situation.
As mentioned in the first message (I think) I appreciate there are no real upsides to the SIPP aside from there being a guarantee the monies will be there for the kids in their older years, and simply not potentially wasted in their earlier ones. That is my only real thinking at this stage.
And yes, finally, I appreciate you comment about the 19 year old, and that really wouldn't be an issue. He's a very clever kid and would likely be fully supportive of it, but not something he would likely think about at his age obviously.
Gary29 said:
We pay ~80% into the ISA and 20% into the SIPP, not really counting on the SIPP being of much vaue unless she pays into it herself as she gets older, but more of a way to hopefully teach her about managing finances, investing for her future and demonstrating the effects of interest compounding, who knows where the world will be in another 50 odd years when she's ready to access it.
I did exactly the same for my son who is now 21 - the SIPP was purely to demonstrate what happens to an investment if it remains untouched for long periods. His SIPP rose from £3,600 to £6,819 in the past 6 years.The ISA has risen in a similar way and he's paying a decent amount each month into it now he's earning.
He also knows his parents retired early due to success with investments so hopefully the penny has dropped.
_Rodders_ said:
ISA. They're going to need the money in their 20's and 30's not in their late 50's.
That said when the time comes I might use a bit of my own TFLS to start them off a SIPP.
They will definately need some monies in their 20's & 30's, but suspect more than ever they will need a decent pension as quite simply the state will likely not be in a position to support the masses IMO.That said when the time comes I might use a bit of my own TFLS to start them off a SIPP.
As such, whilst it may be great having access to 50k (or whatever) at 25, it may be benefical longer term to make that 40k at 25 (again, or whatever figure) and a couple of million at 55. Will the 10k at 25 really make the significant difference the latter monies will ? Personally I think not.
98elise said:
I've gone all in on S&S ISA's for my kids. I want them to be able to buy a home at some stage so it will help. I manage the investments (Hargreaves Lansdown let you link accounts).
That's what I've done for our 1 year old daughter. It will be there for a house deposit when she needs it. Currently sitting at +10.05% so doing quite well.Hobo said:
Not my place to give you advise, but if you haven't been getting 20% returns on average for the past fair few years then you've been missing out massively, and see lots of opportunity for similar growth moving forward.
Below are the returns I'm getting on VAFTGAG - Vanguard FTSE Global All-Cap Index. Good but nowhere near 20% on average, more like half that.https://www.vanguardinvestor.co.uk/investments/van...
Where should we look for 20% + returns?
_Rodders_ said:
ISA. They're going to need the money in their 20's and 30's not in their late 50's.
That said when the time comes I might use a bit of my own TFLS to start them off a SIPP.
I've actually been thinking of using my pension to build my kids pension as I get older and won't need all of it. Take a lump (taxed) each year and pay in into theirs, and they get a tax credit.That said when the time comes I might use a bit of my own TFLS to start them off a SIPP.
LeoSayer said:
Below are the returns I'm getting on VAFTGAG - Vanguard FTSE Global All-Cap Index. Good but nowhere near 20% on average, more like half that.
https://www.vanguardinvestor.co.uk/investments/van...
Where should we look for 20% + returns?
Again, its normally really my place to offer advise, and I'm not saying hold all your monies in similar funds/stocks, but I likely hold near 50% of my investments in 'Tech' and since 2021 the returns have been around;https://www.vanguardinvestor.co.uk/investments/van...
Where should we look for 20% + returns?
2021 +40%
2022 -25%
2023 +100%
2024 +110%
2025 + 25%
2026 (to date) +25%
£100 at the start of 2021 would have seen it grown to circa £550 by end of 2025. Go back further and you'll see similar trends.
Hobo said:
Not my place to give you advise, but if you haven't been getting 20% returns on average for the past fair few years then you've been missing out massively, and see lots of opportunity for similar growth moving forward.
Hahahhahahahahhahahahahahbabaahaa! He walks among us people!
macron said:
Hahahhahahahahhahahahahahbabaahaa!
He walks among us people!
Confused ???He walks among us people!
If you can't go find funds returning well in excess of that figure for a considerable amount of time then its really not my place to start telling you as I'm not a financial advisor, but I do research and then invest in things I believe have a prosperous future moving forward, which a lot of is obviously tech related.
Edited to add, looking at your recent postings, particularly the 'JISA' related one, I'll avoid taking any serious financial advise from yourself thank you
Edited by Hobo on Wednesday 27th May 11:08
Oh dear, I thought I had a reasonable sized one but it now turns out to be very, very small. Such is life.
As for the ISA/SIPP question, you can make the case either way. IMO there's nothing wrong with just doing 50:50 and watching how they go. This is particularly relevant in view of possible future changes to the way things are taxed or not taxed, as the case may be.
As for the ISA/SIPP question, you can make the case either way. IMO there's nothing wrong with just doing 50:50 and watching how they go. This is particularly relevant in view of possible future changes to the way things are taxed or not taxed, as the case may be.
Panamax said:
Oh dear, I thought I had a reasonable sized one but it now turns out to be very, very small. Such is life.
As for the ISA/SIPP question, you can make the case either way. IMO there's nothing wrong with just doing 50:50 and watching how they go. This is particularly relevant in view of possible future changes to the way things are taxed or not taxed, as the case may be.
Re the tax, indeed, as are other concerns such as;As for the ISA/SIPP question, you can make the case either way. IMO there's nothing wrong with just doing 50:50 and watching how they go. This is particularly relevant in view of possible future changes to the way things are taxed or not taxed, as the case may be.
1. Potential limit to value of ISA tax free
2. Potential changes to age of being able to access a SIPP
Whatever choice is made could potentially backfire, hence the 'split' option seeming the right one to me, and I'll probably go something like 75% ISA & 25% SIPP at some point. Its not an urgent decision but wanted peoples thoughts.
Hobo said:
LeoSayer said:
Below are the returns I'm getting on VAFTGAG - Vanguard FTSE Global All-Cap Index. Good but nowhere near 20% on average, more like half that.
https://www.vanguardinvestor.co.uk/investments/van...
Where should we look for 20% + returns?
Again, its normally really my place to offer advise, and I'm not saying hold all your monies in similar funds/stocks, but I likely hold near 50% of my investments in 'Tech' and since 2021 the returns have been around;https://www.vanguardinvestor.co.uk/investments/van...
Where should we look for 20% + returns?
2021 +40%
2022 -25%
2023 +100%
2024 +110%
2025 + 25%
2026 (to date) +25%
£100 at the start of 2021 would have seen it grown to circa £550 by end of 2025. Go back further and you'll see similar trends.
Hobo said:
would like the kids to have a largish nest egg available at 55 courtesy of myself and the wife, rather than maybe just using it all for a house deposit or new car etc earlier.
Thoughts .... ?
Completely arse about tit IMO.Thoughts .... ?
Think about when they will need it, not when you would like them to have it.
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