Investments for children
Discussion
I'd like to invest some money for my daughter (10 years old this month). She has inhereted a sum from her Grandad and I was going to add some to it. The idea is that she can afford university with minimum debt if that's what she decides to do or be a house deposit, so we have about 8 years to play with. There don't seem to be many investment products for children that will take more than a couple of thousand in a year and we need to deal with a little more than that, so I thought I would see what is suggested here so I have a bit of a clue when I end up talking to an IFA. Ideally, any investments should not need to use up any of my allowances or be a potential inheritance tax problem.
Thanks all. Some useful pointers - it is much appreciated.
The IFA I was thinking of has advised my parents very sucessfully for many years so I know he is reasonable, but I would prefer to manage things myself as long as it is only a small draw on my time - I will be fully occupied for the next 2 years. I made pretty good returns with my shares ISA over the last several years using various funds and large dividend payers, then used the funds for building my dream house. (and garage - it is still PH
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My understanding of the student finance thing goes like this: It seems if you go to a Russel Group uni and get a well paid job, you get severely punished. £21k (or £25k as it is supposed to increase to) before repaying sounds good, but it's a very low starting salary even in my under paid industry. And very quickly, this should increase. The debt lasts 30 years before being written off, so anyone who goes to uni to do engineering, medicine etc is punished quite harshly compared to the "average". So that £50k debt could cost £80k or so over the 30 years. Given the interest rate is so high (from what my graduate friends tell me) nobody can really make headway towards repaying the debt meaning it's like setting the higher tax boundary at £25k and not ~£44k until you're almost able to draw a pension. So it sounds like something to be avoided in its current guise assuming daughter is still set on her chosen (expensive, but well paid) career. There will still be plenty left for a house deposit - she was left a significant sum.
The IFA I was thinking of has advised my parents very sucessfully for many years so I know he is reasonable, but I would prefer to manage things myself as long as it is only a small draw on my time - I will be fully occupied for the next 2 years. I made pretty good returns with my shares ISA over the last several years using various funds and large dividend payers, then used the funds for building my dream house. (and garage - it is still PH
)My understanding of the student finance thing goes like this: It seems if you go to a Russel Group uni and get a well paid job, you get severely punished. £21k (or £25k as it is supposed to increase to) before repaying sounds good, but it's a very low starting salary even in my under paid industry. And very quickly, this should increase. The debt lasts 30 years before being written off, so anyone who goes to uni to do engineering, medicine etc is punished quite harshly compared to the "average". So that £50k debt could cost £80k or so over the 30 years. Given the interest rate is so high (from what my graduate friends tell me) nobody can really make headway towards repaying the debt meaning it's like setting the higher tax boundary at £25k and not ~£44k until you're almost able to draw a pension. So it sounds like something to be avoided in its current guise assuming daughter is still set on her chosen (expensive, but well paid) career. There will still be plenty left for a house deposit - she was left a significant sum.
That's the age old risk balance problem isn't it, and it's not possible to decide what to do now although retaining options seems sensible. If I had to get loans like todays students I would still be paying off my loan and it would be eating quite a bit of cash to the point of being a noticable inconvenience that would not go away for another 10 years, leaving me paying significantly more than the £50k whereas my wife would not be paying much at all at the moment. And item 21 in the same list is a gem - "The government can change the rules if they feel hard up. And have done so on at least one occasion." That's an interesting risk to factor in... Since it's my daughter's money at the end of the day I can't withold it once she's 18 (as much as I may want to) if she wants to fund a degree with low employment prospects or buy a Lambo... I can only advise her at that point (I think it should be the yellow one 
) when we know what she actually intends to do.
We're straying off the point a bit even though it's interesting. Right now, I have 8 to 12 years (depending on what we decide on the above) to build as big a cash pile for her as I can so she can hopefully use it sensibly. I like the idea of a SIPP for her because I am probably one of the last to have an industry final salary pension and I think her generation will be even more pushed to work "forever" than my generation, and it's a fairly low % use of the inheritance, and I like the idea of funds and shares. There's probably no pressing need for a tax efficient wrapper for a few years.
) when we know what she actually intends to do. We're straying off the point a bit even though it's interesting. Right now, I have 8 to 12 years (depending on what we decide on the above) to build as big a cash pile for her as I can so she can hopefully use it sensibly. I like the idea of a SIPP for her because I am probably one of the last to have an industry final salary pension and I think her generation will be even more pushed to work "forever" than my generation, and it's a fairly low % use of the inheritance, and I like the idea of funds and shares. There's probably no pressing need for a tax efficient wrapper for a few years.
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