Investing / Saving for Child
Discussion
When I turned 18 I had some sort of insurance policy / savings fund or something that matured and I got a couple of £k - nothing massive - I think it was done through the prudential and Mum & Dad stuck a tenner a month in or something silly.
We've just had our first child and of course everyone is saying here's a bit of cash put it in his bank account, and of course we'd like to start putting a little something away each month for him too.
So what do I need to do?
Yes I can open a childs bank account but I imagine there are other options available to us?
What things should I look at / consider - a small amount of risk is acceptable but nothing major.
Don't forsee needing access to the money and it's not gonna be a huge amount
Would expect to add to it each month a set amount but possibly larger amounts at birthdays / special events etc
So what do we do?
We've just had our first child and of course everyone is saying here's a bit of cash put it in his bank account, and of course we'd like to start putting a little something away each month for him too.
So what do I need to do?
Yes I can open a childs bank account but I imagine there are other options available to us?
What things should I look at / consider - a small amount of risk is acceptable but nothing major.
Don't forsee needing access to the money and it's not gonna be a huge amount
Would expect to add to it each month a set amount but possibly larger amounts at birthdays / special events etc
So what do we do?
Steve Evil said:
I'm looking at doing the same, thinking along the lines of a stocks and shares ISA, but not looking forward to filling out the inevitable 100 page application form.
I've done just this through HL took no more than 10 mins per child transferred funds in from my account select a low cost fund and lock it away for 18 years. Steve Evil said:
Sorry, probably being a bit dim, what's HL?
Hargreaves Lansdown - http://www.hl.co.uk/A common choice for a childhood account / ISA
fat80b said:
Cheers, will have a look into that.My son is 6 months old, so I have gone through this recently.
I decided I wanted a stocks and shares ISA for him, however the downside of the junior ISAs is that they automatically get the money at 18. He might be sensible at 18, but he might be like his Dad, so I've decided to put it in my name, but in a separate fund to my S&S ISA. That way I can make sure he gets the money when he is ready. Up until it reaches the annual limit for a Junior ISA I can transfer it into his name anyway, if for instance I was able to maximise my own ISA contributions.
FWIW I went with Cavendish for my ISA.
I decided I wanted a stocks and shares ISA for him, however the downside of the junior ISAs is that they automatically get the money at 18. He might be sensible at 18, but he might be like his Dad, so I've decided to put it in my name, but in a separate fund to my S&S ISA. That way I can make sure he gets the money when he is ready. Up until it reaches the annual limit for a Junior ISA I can transfer it into his name anyway, if for instance I was able to maximise my own ISA contributions.
FWIW I went with Cavendish for my ISA.
Steve Evil said:
Just opened up an HL ISA for him, stuck it in as cash at the moment as my Dad wants to pay in as his Christmas present, want to have a look the funds before deciding where to invest for him, thinking something global and fairly high risk though.
I did the same although not that high a risk. Grandparents can pay direct into the ISA. I wasn't too bothered about them having access at 18 if I can't trust them to spend it wisely by then there's little hope anything will change a few years later.
When gifts are from a non-parent, perhaps grandparent, then the normal income tax personal allowance and CGT annual allowance apply to the child.
Perhaps surprising, but a 1 year old child can have tax free allowances.
18 years makes equity investment suitable, and if the grandparent gifts apply, then no real need for the extra cost of an ISA, unless the sum involved is large.
Shares are purchased in a nominee name (because the child is under 18), to show (I think the term is) they are in trust for the child.
ie. Frederick Ian Bloggs a/c EJB
Frederick being the father and Eric John Bloggs being the child.
Years ago, dividends could be received on this basis, then the tax which had already been deducted on the child's dividends, could be reclaimed. It was Mr. Brown who changed that, and children then had to pay tax on their income, even though it might have only been £200 per year.
I do know, that begining with the government privatisation shares, worthwhile funds have been created for the now, not so youngsters.
This basis enables the parents to handle matters, until the juniors have wiser money heads.
With an expected lengthy investment period, cash savings would statistically be a disaster.
Edited by Jon39 on Thursday 22 December 08:51
I use Charles Stanley Direct, the platform is excellent and fees reasonable.
Best choices IMO are either stick cash in a particular fund within your own S&S ISA - this is if you want to retain control of when you gift the money. Alternative that doesn't use your annual ISA allowance is a Junior ISA, however this becomes accessible to the child as soon as they hit 18, and you don't have a say.
I also use Vanguard Lifestrategy 80 fund for my daughter.
Best choices IMO are either stick cash in a particular fund within your own S&S ISA - this is if you want to retain control of when you gift the money. Alternative that doesn't use your annual ISA allowance is a Junior ISA, however this becomes accessible to the child as soon as they hit 18, and you don't have a say.
I also use Vanguard Lifestrategy 80 fund for my daughter.
Ours have HL Jisas, the older two got the full CTF starter but I've recently transferred them to Jisa.
you could also look at a help to buy ISA and the new life time Isa coming in April, both of which give away free money, which the jisa doesn't but they also have quite strict rules on when and how you get the money out.
No 18 year to 30 year old is going to be over joyed at getting a pension as a birthday pressie no matter how much sense it makes in the long long run.
you could also look at a help to buy ISA and the new life time Isa coming in April, both of which give away free money, which the jisa doesn't but they also have quite strict rules on when and how you get the money out.
No 18 year to 30 year old is going to be over joyed at getting a pension as a birthday pressie no matter how much sense it makes in the long long run.
Another here with a JISA at HL
Moved his CTF over a year or so ago and pay in anything he gets gifted at Christmas B/day etc.
What's in the at the minute probably wouldn't insure his first car for a year but there's time...
As for him wasting it, what's the difference between the rubbish an 11 year old buys and an 18 year old drinks...
Moved his CTF over a year or so ago and pay in anything he gets gifted at Christmas B/day etc.
What's in the at the minute probably wouldn't insure his first car for a year but there's time...
As for him wasting it, what's the difference between the rubbish an 11 year old buys and an 18 year old drinks...
Echoing what Markii said above I really would consider a pension. If you pick a fund with very low fees and lock the money up until they retire you will be amazed at what even a modest amount could turn into.
£1000 invested today, annual return of 6% would grow to £2854 in 18 years.
The same £1000 would grow to £44,144 in 65 years.
If you can drip a bit more into it over the next few years, then its really not out of the question to have accrued a £200k pension pot for your child, purely by having allowed the investment to grow for long period of time.
It sounds a bit dull but with less pressure on saving for retirement your children will be able to enjoy the money they earn or stand a better chance of getting on the property ladder at a young age.
We have a modest JISA for our daughters.. affectionately known as the tattoos and motorbikes fund!
£1000 invested today, annual return of 6% would grow to £2854 in 18 years.
The same £1000 would grow to £44,144 in 65 years.
If you can drip a bit more into it over the next few years, then its really not out of the question to have accrued a £200k pension pot for your child, purely by having allowed the investment to grow for long period of time.
It sounds a bit dull but with less pressure on saving for retirement your children will be able to enjoy the money they earn or stand a better chance of getting on the property ladder at a young age.
We have a modest JISA for our daughters.. affectionately known as the tattoos and motorbikes fund!
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