Savings for Children

[CrouchingWayne]

Hi guys

I've seen this discussed previously but as it never affected me I just glossed over most of it u fortunately!

We're now lucky enough to have a 10 week old baby boy with us safe and sound - I'm now looking to understand the options for putting money aside for him to use when he is older.

I quite like the idea of a two pro bed approach - putting a modest amount away monthly to contribute to a pension of some description for him and another savings stream for University/house/car/other. Likely both of these will be stocks and shares initially with a view to gradually de-risking as it closes in on withdrawal time.

Unfortunately I've no idea really where offers suitable products and the contribution thresholds.

Has anyone battled through this recently that can advise?

Many thanks
Wayne

[cailean]

Junior ISA would be first on my list. While a pension can be opened why lock the money away until little one is 55, or whenever the age limit will be then. Could also save a deposit on a property and buy one and 'earmark' it for him and transfer when 18 years old.

[Office_Monkey]

I bunged a load into a junior ISA, and have a regular saver account at Halifax (up to £100 a month). Didn't see the value of tying up in a pension as who knows what the rules will be by then.

[IntentionallyBlank]

I can't testify from personal experience, but this caught my attention on your behalf OP...

http://www.fool.co.uk/ten-steps-to-financial-freed...

[Zoon]

IntentionallyBlank said:

I can't testify from personal experience, but this caught my attention on your behalf OP...

http://www.fool.co.uk/ten-steps-to-financial-freed...

Slightly misleading as it will only make the child £24k at 21.
Millionaire by 60 however which is a nice windfall to have but arguably they could have done it themselves by then.

[IntentionallyBlank]

Zoon said:

IntentionallyBlank said:

I can't testify from personal experience, but this caught my attention on your behalf OP...

http://www.fool.co.uk/ten-steps-to-financial-freed...

Slightly misleading as it will only make the child £24k at 21.
Millionaire by 60 however which is a nice windfall to have but arguably they could have done it themselves by then.

Agreed, the title maybe a tad misleading... but the argument surrounding compound interest and the mean returns from the UK Stock Market remains true. The OP obviously wants to do something for his children, and that illustrates quite nicely the benefits to be reaped by only putting aside £25 a month, when compared to leaving the burden solely to them when they reach working age whereby even if they put aside £100 a month they wouldn't catch up by their own retirement.

I also thought it also highlighted a few little tricks to avoid unnecessary taxes, which could then be further researched.

If it helps then great - if not, then please feel free ignore.

[Craikeybaby]

Baby Craik is due this summer, so I've been thinking about this too, I'm targetting the buying a car/first house scenario, rather than a pension type arrangement though. So I was looking at Junior ISA vs using some of my ISA allowance, and as I'm not using my ISA allowance I'll use that, and deffer the decision until the value is near to the Junior ISA limit and then look at it again. My main concern with the Junior ISA is that at 18 they would be able to spend the money however they want.

[IntentionallyBlank]

Craikeybaby said:

My main concern with the Junior ISA is that at 18 they would be able to spend the money however they want.

A concern shared by one and all I daresay!

[CrouchingWayne]

Thanks guys - food for thought. I'd read that Article previously but couldn't find it again - so thanks for that.

As said I'm keen to do a two pronged saving structure, pension being one part of it and general "easy access" the main/bulk. More a lesson in patience and compounding for the wee one than anything else.

JISA sounds like it has potential - I'll take a nosey.

[SunsetZed]

Might be worth taking a look at the Halifax Kids Regular Saver as well. It pays 6% but you can only put £100 per month away and you have to open a new one each year.

I agree with Craikey as well, assuming that you're good with money then unless you're maxing out your own ISA allowance then I don't see a need to lock it away in the little one's name in a JISA. You can always transfer it across to a JISA later if you like.

Also it's not a child's account but First Direct do a 6% regular saver with a limit of £300 per month, depends on your attitude to risk and the amount you have to save where you want to go but personally I like to balance some cash security with some S+S investments.

[Downward]

IntentionallyBlank said:

A concern shared by one and all I daresay!

Only if you tell them it exists !

[CoolHands]

One plus point for the pension though is that the govt will actually add 20% which is about the only time the govt will give you money for nothing!

[cailean]

CoolHands said:

One plus point for the pension though is that the govt will actually add 20% which is about the only time the govt will give you money for nothing!

Yes but taxed on exit...in 5 or 6 decades

[cailean]

IntentionallyBlank said:

A concern shared by one and all I daresay!

That's where good parenting comes in, hoping they will use it for education or towards a deposit on first property (fingers crossed...)

[CoolHands]

cailean said:

CoolHands said:

One plus point for the pension though is that the govt will actually add 20% which is about the only time the govt will give you money for nothing!

Yes but taxed on exit...in 5 or 6 decades

True. Although there's still an advantage if you consider you get 20% added to all that you put in (up to the allowance) but will only pay 20% income tax on the pension you draw above the tax free allowance (currently £11,000). But yeah it definitely isn't as good as it sounds.

I'm in two minds about it - I was considering doing this but on the other hand I think maybe I should just stick money in stocks and shares isa instead. As you allude to, it is accessible which holds some advantage depending on your point of view.

I can't decide. And I need to open it (junior pension sipp) tomorrow to get it in this year.

Question: does anyone know can I open the junior sipp tomorrow with a small amount say a few hundred, and pay the rest (couple of grand) in a weeks time ie after the new financial year deadline?