Savings/ Bank accounts for child
Discussion
This question crops up frequently.
The choice seems to be between risk-free cash accounts, e.g. Junior cash Isa currently paying around 3%, or investment accounts with the potential for much greater returns over the long term but with an element of risk. Either way a Junior Isa can be useful if you want to block access until the child reaches 18 years of age.
The choice seems to be between risk-free cash accounts, e.g. Junior cash Isa currently paying around 3%, or investment accounts with the potential for much greater returns over the long term but with an element of risk. Either way a Junior Isa can be useful if you want to block access until the child reaches 18 years of age.
jinkster said:
Does anyone have any info on the best savings account/ bank accounts for a child (newborn)?
First thing you need to do is to differentiate between money given to the child and money you are putting aside for the child. For your money you need to decide how much you would like available to the child at age 18 and how much you would like to retain a degree of control over (just in case).For a child, with basically 18 years to go before accessing the money, it makes sense to invest the money in stocks and shares.
A child can have a Junior ISA (either a cash one or a S&S one), where the money belongs to the child and cannot be access until age 18 (16 in Scotland). A Bare Trust account is similarly the child's money and belongs to the child, although could be accessed at any point.
I feel it is quite important for children to grow up knowing there is a responsibility they will need to take for money and so it makes sense to use a S&S JISA for some money, and you can always choose to stop contributions once it reaches a certain size. You could also look at holding investments under your own name(s) 'for the benefit of the child'; this is also a very useful option as sometimes you do not know how many children you may end up with and so being able to simply divide this monies appropriately is an advantage.
If you choose to open a S&S JISA your best option will be to open one with Fidelity, as they do not apply a platform charge and do not charge when investing in OEICs/funds. If I had to choose a single fund to start with then the Vanguard FTSE Global All Cap fund is as good as any.
If a cash savings account is a must for money for the child you are happy to lock away until 18 then the Coventry BS Junior ISA at 2.95% is the best option.. The children regular savers are usually better than adult ones, if that is of any benefit.
Useful list of children's savings accounts:
https://www.moneysavingexpert.com/savings/child-sa...
Edited by cloud_dog on Wednesday 10th March 11:51
markiii said:
or consider a pension. Gives an additional 20 years of compound growth and the child can't spunk it up the wall soon as they are 18, plus you get 20% contribution from HMRC
Wondered about this too. The thing about the ISA is it could go to tuition fees/accommodation should he wish to go to university. Or a classic with a V8. Or just a summer holiday with his mates. His choice so it won't be huge...
I'm putting some other investments aside for fees though but it's nice for him to have some.
A pension for a child is usually the very bottom of the list but, as always it all depends on your own circumstances. If the child has/will have sufficient monies themselves (JISA???) and you are happy you will have sufficient funds to support them in other areas (should you wish to) then a pension can be a nice option, especially if it is a way of possibly reducing longer-term IHT considerations etc.
my theory on pensions is if you have something you can stick of said teenage child and say look i know its not very interesting in theory but look this is money that the government gives you more free money for, and means you can stop working sooner and enjoy yourself earlier, then your more likely to get them interested to contribute to it from day one of their working life.
And it' also no excuse for delaying because there's a fund for them to pay into without setting anything up
Therefore getting them on track as early as possible
And it' also no excuse for delaying because there's a fund for them to pay into without setting anything up
Therefore getting them on track as early as possible
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