Investing for Children

[albatross]

I would like some advice on investing money for my children aged 7 & 9. They have some money (a few thousand each) which was left by Deed of Variation from my father's will. The aim is to invest it long term, say 10 years to help with university fees or suchlike. Clearly it's long(ish) term and we want a reasonable return to ensure they get as much help as possible when they venture out into the big wild world...

I'm currently thinking we should set up a bare trust and invest the money in an OEIC - does this sound reasonable? If not, what would you suggest?

Thanks

[onedsla]

Assuming the 9 year old was not born after 1 September 2002, she will not hold a child trust fund so will be entitled to a junior ISA. The amount which can be invested in there is currently £3600 per tax year (so 3600 could be invested now, then the same amount again in April) in stocks & shares. If you fancy self selecting funds, try www.hl.co.uk (there's a separate thread on junior ISAs which lists some other options, but after a fair bit of research I went for that one due to the low dealing fees).

The Junior ISA can also be held in cash, although interest rates are poor (3% range) - you're likely to find a better return over 10 years from your OEIC fund (or similar stock market investment... my daughter opted for AIM oilies which have performed very well since November). For a 10 year return, I'd think about diversifying outside of UK markets - specifically funds which cover India, China and parts of Latin America where growth should outperform more mature Western markets.

As I assume your 7 year old was born between 1 September 2002 and 2 January 2011, does she hold a child trust fund? I'm not too familiar with these (my daughter held on until 3rd Jan 2011 so has an JISA)

[cailean]

As said, CTF or JISA depending on dates of birth. Both now have annual contribution limits of £3600 and all income/gains are tax free. For a 10 year period don't leave the funds in cash, invest in equity, shares, funds etc.

[albatross]

Ah, good point, I forgot to mention they both have Child Trust Funds which I am paying into regularly. So I'm really looking for lump sum investment options.

Thanks for the suggestions

[Kudos]

Remember that all payments into CTF belong to the child on maturity to go spend on coke/hookers etc and there's nowt you can do.

Stick money elsewhere and at least you can retain control.