Childrens' savings/investments/pensions

aj23 wrote: »

The Coventry Junior ISA would return £16.80, not £9 as claimed above. That is wrong. Type £480 in the calculator in the box MSE provides for the listing and it will say £16.80, and this will compound annually with your subsequent year on year monthly deposits.

Oh dear. I wasn't going to quote you because you told me not to and I don't like upsetting children, but you continue to post incorrect information.

aj23 wrote: »

It doesn't work like a regular saver, where you get the interest rate on the average balance. This is an ISA where the interest is calculated daily and paid annually on the full balance, not the average balance. That's how all ISA's work.

Yes, interest is calculated daily, but only on the money that currently resides in the account, not on some projected figure that someone might have at the end of the year. It works exactly like a regular saver!

aj23 wrote: »

It doesn't matter if you drip feed the £480, or lump deposit the £480, you will still get £16.80 after 12 months. As I said, this isn't regular saver where interest is accrued differently to an ISA.

Yes it does matter if you drip feed the money in or not. They only pay interest on the balance that is in your account at any given time. Once again, you are demonstrating that you don't know how interest actually works.

aj23 wrote: »

As MallyGirl said, Junior ISAs, and in turn, ISAs, work like normal savings account and pay interest on the balance, not the average balance.

Yes, they do work like a non-tax privileged savings account, but that doesn't mean they pay you 3.5% (or whatever the headline rate is) on the full year end balance unless that was the opening balance too. Interest is calculated daily (you were at least correct about that), but only on what is in the account at the time.

aj23 wrote: »

With regard to pensions, bare in mind that this won't be accessible in part until you're child is (at present) 55 year old, where he or she can take out 25% tax free, but state pension age will most likely be in the 70s by the time your child reaches 55.

So, firstly, just to be clear, you do admit that you were wrong in saying that a pension couldn't be opened for a child?

You are speculating about what that child's NPA would be. You may be proved right in your speculation, but it is, at present, just speculation.

More importantly, it is irrelevant what that child's NPA will turn out to be, because the pension will still provide an income in retirement. When that retirement happens is neither here nor there. Furthermore, the longer money is invested in the markets the longer it has to grow in value. Investing sooner rather than later is actually a positive in favour of realising good returns.

aj23 wrote: »

I'm guessing you want something where you child has funds at 18, for university, car, house deposit etc., which someone above has not factored in.

Why are you guessing what the OP wants? If you are unsure then ask. (Hint: they've already told you that they are looking at two distinct timescales; one to the child's 18th birthday, and the other for the child's retirement).

Suggesting an S&S JISA for a 2 year old is entirely consistent with delivering positive returns when they reach 18. The investment timeframe is suitably long enough, but if you don't believe me ask many of the other people on these forums who invest for themselves (in ISAs, SIPPs and GIAs) and for their children (in JISAs).

aj23 wrote: »

It's also relevant that retirement will go up as people are living longer and we need more taxes for supporting out services. It's a realty that millennial and future generations will be working longer, and will need more money for supporting themselves prior to retirement as the rate of rising living costs.

This has nothing to do with the OP's question.

Their child will, we assume, work and receive a salary or wage for doing so, and therefore have money to live on while they are working.

Your assumption about rising cost of living ignores the potential rise in incomes too.

Yes, you will be paying for my retirement, however. So, thanks for that!

aj23 wrote: »

ISA don't work like that.

When I had some a few years ago, one of which I was depositing to almost weekly, and I got 2% on the balance at the end which was pretty much as I had forecasted.

I also had another one with the same provider from the previous year that I only deposited to once, and I got 2% on the balance on that one as well and my forecast was correct.

One was dripfred, one was lump deposit, both gave me the same result in terms of interest accrual end of term, and I got pretty much the same on both of them as the balances were very similar.

Either your ISA provider can't count, or, more likely, you are wrong.

i would skip the pension altogether. the sort of amounts you mention aren't going to end up producing too much money for a deposit on a house (a big deposit is always better than a small one ). there's no point in tying some money up until your child is at least 55, while they might be struggling to buy a home.

also, there is higher education. currently, the maintenance loans are not enough to live off (though perhaps corbyn will fix this ).

cash for short term. S&S JISA for longer term.