Nest egg for a niece/nephew before birth - any thoughts?
Discussion
My sister and her husband are expecting a child. They know it's just the one child, but don't want to know the gender until birth.
I don't expect to have children in my lifetime - hence I want to gift the baby with what I've had saved up. My idea was to stick the money in a trust fund, but I can't do so without my sister or brother in law as part of it (which is fine, they know) - but most banks have said they can't do this until the baby's born.
That's also fine, but I could do with some advice - what's the best avenue to invest £10,000-£15,000 for a niece/nephew? My health isn't fantastic so assuming the child's born in 2025, they'd turn 18 in 2043, which I may not be around to see. I just want to make sure I've put it somewhere safe that it can be forgotten about and build a bit of interest (I'm not expecting it to jump 200%!) - but somewhere that in 2043 onwards, the money is safe and accessible as needed.
Thanks in advance.
I don't expect to have children in my lifetime - hence I want to gift the baby with what I've had saved up. My idea was to stick the money in a trust fund, but I can't do so without my sister or brother in law as part of it (which is fine, they know) - but most banks have said they can't do this until the baby's born.
That's also fine, but I could do with some advice - what's the best avenue to invest £10,000-£15,000 for a niece/nephew? My health isn't fantastic so assuming the child's born in 2025, they'd turn 18 in 2043, which I may not be around to see. I just want to make sure I've put it somewhere safe that it can be forgotten about and build a bit of interest (I'm not expecting it to jump 200%!) - but somewhere that in 2043 onwards, the money is safe and accessible as needed.
Thanks in advance.
Edited by Second Best on Wednesday 16th October 05:03
Are you happy for them to have full access to the funds once they turn 18?
If so, then a junior ISA can be setup once they are born and the money can't be withdrawn until then except in very specific circumstances eg. terminal illness.
Otherwise, a trust will be required but that's a different level of complexity.
Choosing the right investment for such a long time period is important. The 'fire and forget' option is likely to be a low cost global equity index tracker fund.
If so, then a junior ISA can be setup once they are born and the money can't be withdrawn until then except in very specific circumstances eg. terminal illness.
Otherwise, a trust will be required but that's a different level of complexity.
Choosing the right investment for such a long time period is important. The 'fire and forget' option is likely to be a low cost global equity index tracker fund.
Second Best said:
I don't expect to have children in my lifetime - hence I want to gift the baby with what I've had saved up. My idea was to stick the money in a trust fund, but I can't do so without my sister or brother in law as part of it (which is fine, they know) - but most banks have said they can't do this until the baby's born.
A trust is just a wrapper, to see any sort of return you’d still need the money invested/managed. For the sums involved, ISA/pension much less hassle…
LeoSayer said:
Are you happy for them to have full access to the funds once they turn 18?
If so, then a junior ISA can be setup once they are born and the money can't be withdrawn until then except in very specific circumstances eg. terminal illness.
Otherwise, a trust will be required but that's a different level of complexity.
Choosing the right investment for such a long time period is important. The 'fire and forget' option is likely to be a low cost global equity index tracker fund.
This. If you go for the Junior ISA, have a look at the Legal and General Global funds. The Global 100 and the Global Tech Index have done well and are low cost. If so, then a junior ISA can be setup once they are born and the money can't be withdrawn until then except in very specific circumstances eg. terminal illness.
Otherwise, a trust will be required but that's a different level of complexity.
Choosing the right investment for such a long time period is important. The 'fire and forget' option is likely to be a low cost global equity index tracker fund.
Some very good ideas already - congrats on the Uncle status.
As you say some won’t allow purchases in advance of birth and some will require “ trustee “ control which could be yourself or your Sister until the child reaches 18.
Junior ISA seems sensible ( you could pick a number of different funds if a Tracker isn’t considered “ exciting “ enough ) and perhaps split your investment 90/10 and get them some premium bonds too.
As you say some won’t allow purchases in advance of birth and some will require “ trustee “ control which could be yourself or your Sister until the child reaches 18.
Junior ISA seems sensible ( you could pick a number of different funds if a Tracker isn’t considered “ exciting “ enough ) and perhaps split your investment 90/10 and get them some premium bonds too.
journeymanpro said:
Vanguard junior isa
I'm watching this thread with interest as I'm about to open a JISA for my daughter (I think — still weighing up the pros and cons).I see Vanguard gets recommended frequently on PH. What's the reason for this? Are they better than other providers? I note Fidelity, for example, don't have a platform fee but Vanguard does, for example.
TGCOTF-dewey said:
What about starting a pension for them.
We did this for our Son as we took the view that a big gift we can give him is not having to work to 75-80, especially as our generation won't have to.
£2880/ tax year max, so could be a part of what the OP does, but takes a while to get through the 10-15k available. And needs investing.We did this for our Son as we took the view that a big gift we can give him is not having to work to 75-80, especially as our generation won't have to.
Personally OP I'd put half your cash in premium bonds for them, and stick the other half in a JISA in a global tracker fund if you want them to have the cash at 18.
Or if you have 15k you could split it 3 ways, 5k PBs, 5k JISA, then put 2880 into a JSIPP as the tax man tops it to 3600 for you, and put nearly the same again in after next April (again, topped up).
That's a spread of things for parents to manage, but it's great for the kid.
Thanks all for your replies. Much appreciated, some good things to research. My dad (kid's grandfather) has mentioned premium bonds too.
If I may ask, do any of you have experience with premium bonds and are they worth investing in? I like the idea of splitting the money just to cover all bases, but I want to make things easy for my sister's family.
If I may ask, do any of you have experience with premium bonds and are they worth investing in? I like the idea of splitting the money just to cover all bases, but I want to make things easy for my sister's family.
Second Best said:
Thanks all for your replies. Much appreciated, some good things to research. My dad (kid's grandfather) has mentioned premium bonds too.
If I may ask, do any of you have experience with premium bonds and are they worth investing in? I like the idea of splitting the money just to cover all bases, but I want to make things easy for my sister's family.
Avoid PB for long term such as you’re after. If I may ask, do any of you have experience with premium bonds and are they worth investing in? I like the idea of splitting the money just to cover all bases, but I want to make things easy for my sister's family.
The overall interest rate isn’t attractive and that return is spread across the big winners (of which there are few) and everyone else. Unless you happen to win big your return won’t keep up with inflation.
My grandparents kindly put a decent sum in PB, and in cash in the building society, for me when I was born. By the time I got access to it at university it had been eroded away by inflation… expressed gratitude for it, obviously, but it was a shame to see that the money could have been much better managed.
LooneyTunes said:
Second Best said:
Thanks all for your replies. Much appreciated, some good things to research. My dad (kid's grandfather) has mentioned premium bonds too.
If I may ask, do any of you have experience with premium bonds and are they worth investing in? I like the idea of splitting the money just to cover all bases, but I want to make things easy for my sister's family.
Avoid PB for long term such as you’re after. If I may ask, do any of you have experience with premium bonds and are they worth investing in? I like the idea of splitting the money just to cover all bases, but I want to make things easy for my sister's family.
The overall interest rate isn’t attractive and that return is spread across the big winners (of which there are few) and everyone else. Unless you happen to win big your return won’t keep up with inflation.
My grandparents kindly put a decent sum in PB, and in cash in the building society, for me when I was born. By the time I got access to it at university it had been eroded away by inflation… expressed gratitude for it, obviously, but it was a shame to see that the money could have been much better managed.
Whilst I agree with LoonyTunes on the return itself ,with PB’s there is always that chance of a big win and the bulk of your investment should by itself return a decent quantum in the Stock Market until the child is 18 anyway.
My children all had funds set up on their birth which by their 18th birthdays had all tripled in value by the time we relinquished control. Their premium bonds hadn’t.
That said my wife and I have had the maximum invested in PB’s for years and have never won big but on average always get around 3/4% nett pa which as higher rate tax payers was the original reason for their investment.
I think you cannot buy PB’s unless you are the Parent.
My father invested for his four grandchildren but made the stipulation that the payouts wouldn't be until they were 23 years old. This was in the hope that by that age they were sufficiently mature to make more wise decisions about a goodly lump of money than, perhaps, they might at 18 years old. I must say that makes total sense to me and certainly was a wise move.
Perhaps this might be considered by the OP as an alternative to inheriting at 18, when we are either starting to work or going in to full time education with a party mindset?
Perhaps this might be considered by the OP as an alternative to inheriting at 18, when we are either starting to work or going in to full time education with a party mindset?
Our experience of PBs has been that they are a good place to park some money short term without the erosion of inflation, without the cost associated with being a higher rate tax payer and with security paid by the government. I wouldn't include them in any legacy I was putting together.
Also - what you are doing is a tremendously lovely thing. Beyond the money, your niece/nephew will benefit from having you in their life for however long and seeing your perspectives and values.
Also - what you are doing is a tremendously lovely thing. Beyond the money, your niece/nephew will benefit from having you in their life for however long and seeing your perspectives and values.
My god you lot are miserable buggers aren't you? Pensions? ISAs? Might as well tell them life is not worth living until you are past the grind of working life and can retire and die.
Buy a case of champagne, whiskey or port from their birth year and keep it in bond. They can share it with friends and family it on a milestone birthday or save it for their wedding day. Give them something tangible to enjoy. At the very least, even if they don't drink they'll have a case of vintage booze to sell.
Buy a case of champagne, whiskey or port from their birth year and keep it in bond. They can share it with friends and family it on a milestone birthday or save it for their wedding day. Give them something tangible to enjoy. At the very least, even if they don't drink they'll have a case of vintage booze to sell.
LimaDelta said:
My god you lot are miserable buggers aren't you? Pensions? ISAs? Might as well tell them life is not worth living until you are past the grind of working life and can retire and die.
Buy a case of champagne, whiskey or port from their birth year and keep it in bond. They can share it with friends and family it on a milestone birthday or save it for their wedding day. Give them something tangible to enjoy. At the very least, even if they don't drink they'll have a case of vintage booze to sell.
I was tempted to suggest 1st growth Bordeaux / “super seconds” for investment, especially with wine prices currently being a little depressed… likely to be a better investment than champagne or Port (and old champagne is not to everyone’s taste, and Port can usually still be bought at reasonable prices in future years). In the case of my kids, they have some “large format” bottles of various wines from their birth vintages that have future enjoyment and investment potential. And a few standard/half bottles to hopefully enjoy together whilst we wait. Buy a case of champagne, whiskey or port from their birth year and keep it in bond. They can share it with friends and family it on a milestone birthday or save it for their wedding day. Give them something tangible to enjoy. At the very least, even if they don't drink they'll have a case of vintage booze to sell.
LimaDelta said:
My god you lot are miserable buggers aren't you? Pensions? ISAs? Might as well tell them life is not worth living until you are past the grind of working life and can retire and die.
Buy a case of champagne, whiskey or port from their birth year and keep it in bond. They can share it with friends and family it on a milestone birthday or save it for their wedding day. Give them something tangible to enjoy. At the very least, even if they don't drink they'll have a case of vintage booze to sell.
FIL bought a cask of whisky for each of my kids when born. I think the appeal, as well as the novelty factor, was there is no CGT on it?Buy a case of champagne, whiskey or port from their birth year and keep it in bond. They can share it with friends and family it on a milestone birthday or save it for their wedding day. Give them something tangible to enjoy. At the very least, even if they don't drink they'll have a case of vintage booze to sell.
The Junior ISA approach and a low cost fund would definitely be my recommendation.
A SIPP isn't going to excite anyone under 40 - I'm 46 and feel like I am tying money up that I may never be able to access!
Look at the compound interest calculators - 10k now in a fund which returns 10% a year would mean they get £56k. If they leave the money alone until they are buying a house at 25 they would have £108k which would feel amazing at that age.
A SIPP isn't going to excite anyone under 40 - I'm 46 and feel like I am tying money up that I may never be able to access!
Look at the compound interest calculators - 10k now in a fund which returns 10% a year would mean they get £56k. If they leave the money alone until they are buying a house at 25 they would have £108k which would feel amazing at that age.
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