Children’s savings
Discussion
Hi all, I’m keen for the kids’ savings accounts to do better than the 1.25% APR accounts they’re currently in. I pay in a monthly amount, and then grandparents etc will provide some cash on birthdays etc, so easily paying in is a must.
I’ve looked at ISA options but I’d prefer to retain some level of control when they get to 18 rather than just hand it over. My FA has suggested a unit trust, but charges 3% for every deposit which seems a bit racy, although I don’t really have a basis for comparison.
Any other options out there?
I’ve looked at ISA options but I’d prefer to retain some level of control when they get to 18 rather than just hand it over. My FA has suggested a unit trust, but charges 3% for every deposit which seems a bit racy, although I don’t really have a basis for comparison.
Any other options out there?
You may want to look at at local building society, we use
https://www.principality.co.uk/savings-accounts/ch...
Because they have a local branch and taking the children to pay/transfer their own money will hopefully help teach them good habits,we'll see...
https://www.principality.co.uk/savings-accounts/ch...
Because they have a local branch and taking the children to pay/transfer their own money will hopefully help teach them good habits,we'll see...
Vanguard junior isa is worth researching, clearly at the mercy of the markets but with around a 15 year Outlook, you've got reasonable odds. Very low fees which don't erode your investment, surprised your FA is pushing you towards products with high fees, or at least not talking you through different options oh; oh wait, no I'm not.
Or you could just invest it in a product in your or your partners names, and distribute accordingly at a suitable point in time.
Or you could just invest it in a product in your or your partners names, and distribute accordingly at a suitable point in time.
juggsy said:
Hi all, I’m keen for the kids’ savings accounts to do better than the 1.25% APR accounts they’re currently in. I pay in a monthly amount, and then grandparents etc will provide some cash on birthdays etc, so easily paying in is a must.
I’ve looked at ISA options but I’d prefer to retain some level of control when they get to 18 rather than just hand it over. My FA has suggested a unit trust, but charges 3% for every deposit which seems a bit racy, although I don’t really have a basis for comparison.
Any other options out there?
I’ve looked at ISA options but I’d prefer to retain some level of control when they get to 18 rather than just hand it over. My FA has suggested a unit trust, but charges 3% for every deposit which seems a bit racy, although I don’t really have a basis for comparison.
Any other options out there?
Yes. My family have very successfully used a simple method for more than one generation and I put it into practice for grandchildren just over a year ago.
It also solves the problem of handing over at 18. Think we all know what we might have done with a surprise pot of money at 18 and it would not have lasted long !
I purchased shares in three large companies, which I was already familiar with as being steady investments.
After the certificates were received, the ownership was transferred to son with an account designation of each grandchild.
With electronic shareholding platforms, no one seems to want to do designated accounts. That is necessary to officially record the beneficial owner (as grandchild). Will repeat further gifts as time goes by. Tax position is better when the gift is to grandchildren, eg. each childs CGT annual allowance applies. ie. no advantage having ISAs, unless the fund becomes really enormous.
Just wait then for the businesses to grow long-term. Obviously no guarantee, but wealth cannot be achieved without some risk.
Since those funds began, the total capital values have now increased by 25.3% plus the dividends received in addition.
Not bad for 15 months, but don't expect that to be the continuing rate of growth.
Usually there are long time periods involved for these circumstances, so equities stand a good chance of being the profitable choice.
No fees involved after the original purchases.
If necessary, education perhaps, there is of course flexibility to withdraw some money without any restrictions.
The only snag is some investment knowledge is needed, but anyone can learn that if they want to and have the appropriate temperament.
Edited by Jon39 on Saturday 28th May 07:29
Jon39 said:
juggsy said:
Hi all, I’m keen for the kids’ savings accounts to do better than the 1.25% APR accounts they’re currently in. I pay in a monthly amount, and then grandparents etc will provide some cash on birthdays etc, so easily paying in is a must.
I’ve looked at ISA options but I’d prefer to retain some level of control when they get to 18 rather than just hand it over. My FA has suggested a unit trust, but charges 3% for every deposit which seems a bit racy, although I don’t really have a basis for comparison.
Any other options out there?
I’ve looked at ISA options but I’d prefer to retain some level of control when they get to 18 rather than just hand it over. My FA has suggested a unit trust, but charges 3% for every deposit which seems a bit racy, although I don’t really have a basis for comparison.
Any other options out there?
Yes. My family have very successfully used a simple method for more than one generation and I put it into practice for grandchildren just over a year ago.
It also solves the problem of handing over at 18. Think we all know what we might have done with a surprise pot of money at 18 and it would not have lasted long !
I purchased shares in three large companies, which I was already familiar with as being steady investments.
After the certificates were received, the ownership was transferred to son with an account designation of each grandchild.
With electronic shareholding platforms, no one seems to want to do designated accounts. That is necessary to officially record the beneficial owner (as grandchild). Will repeat further gifts as time goes by. Tax position is better when the gift is to grandchildren, eg. each childs CGT annual allowance applies. ie. no advantage having ISAs, unless the fund becomes really enormous.
Just wait then for the businesses to grow long-term. Obviously no guarantee, but wealth cannot be achieved without some risk.
Since those funds began, the total capital values have now increased by 25.3% plus the dividends received in addition.
Not bad for 15 months, but don't expect that to be the continuing rate of growth.
Usually there are long time periods involved for these circumstances, so equities stand a good chance of being the profitable choice.
No fees involved after the original purchases.
If necessary, education perhaps, there is of course flexibility to withdraw some money without any restrictions.
The only snag is some investment knowledge is needed, but anyone can learn that if they want to and have the appropriate temperament.
Edited by Jon39 on Saturday 28th May 07:29
Thanks for the replies so far. Unfortunately we don’t have any local building societies, all the banks in our local town have closed! And there’s not a huge amount nearby other than the mainstream.
I’m ideally looking for something along the lines of a fund, but I’m not savvy enough to manage it myself. I need to be able to pay in ad hoc as well as regularly, so I’m not sure how well buying stocks on a monthly basis would work.
Junior ISA is another option but realistically I’m saving towards their further education which is why I don’t want to just hand it to them at 18, but have some say on what it’s used for.
I’m ideally looking for something along the lines of a fund, but I’m not savvy enough to manage it myself. I need to be able to pay in ad hoc as well as regularly, so I’m not sure how well buying stocks on a monthly basis would work.
Junior ISA is another option but realistically I’m saving towards their further education which is why I don’t want to just hand it to them at 18, but have some say on what it’s used for.
Roman Rhodes said:
Unless you’re creating a bare trust with the designated account (which the child can take control of at 18 or 16 in Scotland) you’ll retain the tax liability.
That would be applicable if the money was given by parent to child, but am almost certain that money gifted to children by grandparents or other unconnected parties, makes the money entirely the childs with the normal tax allowances we all have applying.
An understandable restriction, otherwise parents could just pass money to their children, to obtain an additional set of tax allowances.
The child can take control of course at 18 if they know and demand, but perhaps having been busy with education, you might have forgotten to mention it. The whole exercise is in their best interest after all. My children benefited from their grandfather doing this and it paid a portion towards school fees, then later when in their 30s, first home deposits.
Roman Rhodes said:
BobToc said:
There’s a lot of talk about the risks of handing kids relatively large sums of money at 18, but has anyone here actually done this and had a good or bad experience?
Not had a bad experience. Kids now 28, 24 and 19. Neither car dealers or Las Vegas have benefitted!Jon39 said:
Roman Rhodes said:
Unless you’re creating a bare trust with the designated account (which the child can take control of at 18 or 16 in Scotland) you’ll retain the tax liability.
That would be applicable if the money was given by parent to child, but am almost certain that money gifted to children by grandparents or other unconnected parties, makes the money entirely the childs with the normal tax allowances we all have applying.
An understandable restriction, otherwise parents could just pass money to their children, to obtain an additional set of tax allowances.
The child can take control of course at 18 if they know and demand, but perhaps having been busy with education, you might have forgotten to mention it. The whole exercise is in their best interest after all. My children benefited from their grandfather doing this and it paid a portion towards school fees, then later when in their 30s, first home deposits.
I can see no benefit in going the designated/bare trust route until annual JISA allowances have been used up. In both scenarios the child gains control of the assets at 18.
duckson said:
Roman Rhodes said:
BobToc said:
There’s a lot of talk about the risks of handing kids relatively large sums of money at 18, but has anyone here actually done this and had a good or bad experience?
Not had a bad experience. Kids now 28, 24 and 19. Neither car dealers or Las Vegas have benefitted!PistonHead007 said:
Unless you're minted and maxxed out all your own allowances with lots of tax due on unwrapped investments then just invest in your name. Not many married couples have 40kpa net spare to utilise two ISA allowances...
Even ISA interest rates are a bit rubbish, and currently my cash ISAs are easy access whereas for the kids I want to lock it away long term for better gains.we have set up pensions for the children. We pay 25 each month in for them. One child has put in 2k and we have shown them the wonders of compounded growth as they have 40 odd years left before they retire we thought this would make it easy for them bu setting them up and then its super easy for them to put in regular sums when they start to work and have amazing growth potential with modest sums being put in now at the start of 40 years.
the projections are amazing with a 4% growth over 40 years. They are with IM who sponsor the site.
the projections are amazing with a 4% growth over 40 years. They are with IM who sponsor the site.
Roman Rhodes said:
I can see no benefit in going the designated/bare trust route until annual JISA allowances have been used up. In both scenarios the child gains control of the assets at 18.
The benefit of either method, can only be judged years later by the results of investing.
With the original generation fund, I was in the role of son and chose the investments. JISAs had not been thought of, nor ISAs, which were then called PEPs.
When the children (beneficiaries) reached 18, I don't think they knew anything about their funds, or (fortunately) how much they could have, if they asked!
Dividend income was by that time significant, so it helped for universities, avoiding any student debt (on principle). The fund continued to grow for a further 10 years, until it was home deposit times. Not all was needed, so eventually the remaining shareholdings were transferred to the by now, 30 somethings. A good starter for them to gain their own practical experience of investing.
Documents were indeed prepared at the outset, to confirm gifts from grandparent to children.
At that time there was even a tax relief scheme by which those gifts benefited. Have forgotten what it was called, but involved the grandparent committing to an annual gift payment for 5, or might have been 7 years. Think the giver reclaimed full income tax on the total gift. It might have been called Deed of Covenant. A helpful incentive, but such things come to an end.
superlightr said:
... the projections are amazing with a 4% growth over 40 years. They are with IM who sponsor the site.
I suppose a projection is simply that. You can only judge much later on.
Had 4% average annual growth been achieved over the past 40 years, then you would have needed to replace amazing with very poor.
During those 40 years there were periods of very high inflation, so investment returns were generally higher. My annual fund growth had averaged 14·16% at year 29, but since about 2015 that figure has been slowly declining because base rates and inflation ran at such low levels. Still double figures though after year 34. That average might even tick up this year, if the YTD performance holds until the year end. Who knows.
Have Vanguard Life Strategy stocks and shares junior ISAs for both my kids. I was using our own ISAs but decided to max those out now ourselves.
If they spunk it when they receive it at 18, then we have failed as parents.
Compared to the poor deal my own parents got trying to save for their kids (building society / pru-style low interest, effectively zero - they got screwed), then it's a risk I'm willing to take. Like said before, I then encourage the kids to check on their investments and hopefully as they grow up they'll take investing in their stride - wish I had realised that when I was younger.
If they spunk it when they receive it at 18, then we have failed as parents.
Compared to the poor deal my own parents got trying to save for their kids (building society / pru-style low interest, effectively zero - they got screwed), then it's a risk I'm willing to take. Like said before, I then encourage the kids to check on their investments and hopefully as they grow up they'll take investing in their stride - wish I had realised that when I was younger.
Edited by nebpor on Saturday 28th May 14:24
Jon39 said:
superlightr said:
... the projections are amazing with a 4% growth over 40 years. They are with IM who sponsor the site.
I suppose a projection is simply that. You can only judge much later on.
Had 4% average annual growth been achieved over the past 40 years, then you would have needed to replace amazing with very poor.
During those 40 years there were periods of very high inflation, so investment returns were generally higher. My annual fund growth had averaged 14 16% at year 29, but since about 2015 that figure has been slowly declining because base rates and inflation ran at such low levels. Still double figures though after year 34. That average might even tick up this year, if the YTD performance holds until the year end. Who knows.
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