Junior ISA and other options

[Woody John]

Hi

Grateful for some advice on building savings for child.

The wife has set up a junior ISA for the new born, Rate is around 3.5%.
Obviously can't touch anything until the baby is an adult.
They will then have full rights to do with the savings as they please.

On the face of it, the rate would not make you drool and in my view it allows the bank to hold your money hostage for a extremely long period of time. It also prevents the opportunity to take a portion of that money and invest it into other attractive opportunities that may come along over the years. The benefit being it is a safe bet and prevents the temptation to dip into savings.
On the other side, the young adult could blow 18years of hard savings in a short amount of time if they choose to do so.

Anyone got a better option/s?

John

[PhilboSE]

You can do a stocks & shares JISA. Over 18 years that is extremely likely to give a better return than a cash ISA.

[putonghua73]

Exactly what we intend to do with the savings that we - partner and I - and my mother and her partner have for our Little Man re: Child Stocks ISA Global tracker.

We'll contribute in either £250 or £500 chunks to reduce transaction fees.

[DoubleSix]

Just consider that the ‘child’ will gain legal access to the funds at 18 (and control at 16).

Were you making responsible decisions at that age? Some do, some don’t.

If you’re not making full use of your own ISA allowance that would certainly give you more ability to ensure the money is used as intended.

Alternatively, a Junior SIPP would provide a longer term vehicle and perhaps some behaviour forming benefits.

[Woody John]

DoubleSix said:

Just consider that the ‘child’ will gain legal access to the funds at 18 (and control at 16).

Were you making responsible decisions at that age? Some do, some don’t.

If you’re not making full use of your own ISA allowance that would certainly give you more ability to ensure the money is used as intended.

Alternatively, a Junior SIPP would provide a longer term vehicle and perhaps some behaviour forming benefits.

My ISA is 0.75%.
The child ISA is 3.5%

I have doubts about the worth of my own pension when all is said and done never mind my child.
Currently I will retire at 66. That will probably be pushed back to 70 by the time I get near.
It appears they just don't want us retiring or preferably keeling over the day after retirement.

[Unexpected Item In The Bagging Area]

A child won’t take control of an investment and blow the cash if they don’t know about it... If anyone doubts their child’s ability to be sensible with the money then they could simply not tell them it exists until they reach a suitable stage in life.

[Woody John]

Unexpected Item In The Bagging Area said:

A child won’t take control of an investment and blow the cash if they don’t know about it... If anyone doubts their child’s ability to be sensible with the money then they could simply not tell them it exists until they reach a suitable stage in life.

This is probably what we will do. Along with regular accounts to allow them to handle money from a young age.

[Derek Chevalier]

Woody John said:

It appears they just don't want us retiring or preferably keeling over the day after retirement.

Who?

[selmahoose]

you can only fool all of the people some of the time

[DoubleSix]

Woody John said:

DoubleSix said:

Just consider that the ‘child’ will gain legal access to the funds at 18 (and control at 16).

Were you making responsible decisions at that age? Some do, some don’t.

If you’re not making full use of your own ISA allowance that would certainly give you more ability to ensure the money is used as intended.

Alternatively, a Junior SIPP would provide a longer term vehicle and perhaps some behaviour forming benefits.

My ISA is 0.75%.
The child ISA is 3.5%

I have doubts about the worth of my own pension when all is said and done never mind my child.
Currently I will retire at 66. That will probably be pushed back to 70 by the time I get near.
It appears they just don't want us retiring or preferably keeling over the day after retirement.

You seem to be making the classic PI mistake of confusing the tax wrapper with the investment.

Your rate of return is not dictated by the chosen tax wrapper; ISA, Pension etc. Your rate of return will be determined by the investment you chose to put inside the aforementioned wrapper.

[DoubleSix]

Woody John said:

Unexpected Item In The Bagging Area said:

A child won’t take control of an investment and blow the cash if they don’t know about it... If anyone doubts their child’s ability to be sensible with the money then they could simply not tell them it exists until they reach a suitable stage in life.

This is probably what we will do. Along with regular accounts to allow them to handle money from a young age.

When the child turns 18 the Junior ISA will automatically be moved to an 'adult' ISA and the provider will communicate directly to them. At 16 the 'child' can apply to be the registered contact and your administrative powers will effectively cease.

Edited by DoubleSix on Tuesday 12th March 19:28

[Woody John]

DoubleSix said:

Woody John said:

DoubleSix said:

Just consider that the ‘child’ will gain legal access to the funds at 18 (and control at 16).

Were you making responsible decisions at that age? Some do, some don’t.

If you’re not making full use of your own ISA allowance that would certainly give you more ability to ensure the money is used as intended.

Alternatively, a Junior SIPP would provide a longer term vehicle and perhaps some behaviour forming benefits.

My ISA is 0.75%.
The child ISA is 3.5%

I have doubts about the worth of my own pension when all is said and done never mind my child.
Currently I will retire at 66. That will probably be pushed back to 70 by the time I get near.
It appears they just don't want us retiring or preferably keeling over the day after retirement.

You seem to be making the classic PI mistake of confusing the tax wrapper with the investment.

Your rate of return is not dictated by the chosen tax wrapper; ISA, Pension etc. Your rate of return will be determined by the investment you chose to put inside the aforementioned wrapper.

Do you care to expand?