Bank Account for New Born

Lowermax · 10 March 2018 at 9:27AM

Hi Guys,

Hopefully someone can help me out here with a simple question, My wife gave birth to our son 4 weeks ago and he has been given money from grandparents (around £700), we're looking to set up a bank account for him that and we will pay regular amounts (£20-£50pm) into ontop of the £700, we wont need access to the money as it will be given to him when he is 18 (Well, probably sooner so he can understand the value of saving).

I've been looking on the page about Childrens Savings and have picked out the following two options that seem the best:

Halifax Regular saver (4.5% AER) allows amounts from £20 - £100 to be paid in each month
Santander 123 Mini current account (3% AER) Allows unlimited amounts to be paid in.

My dilemma is that with the Halifax account we could only pay £100 a month, whereas the Santander we could pay the full £700 and earn interest in it straight away on the full amount,.

Can anyone advise the account we will make the best interest on, or if anyone else has a better option.

Thanks a lot

Jonny

colsten · 10 March 2018 at 10:18AM

Have you considered a JISA? Check over on the ISA Board

Westie983 · 10 March 2018 at 12:00PM

Lowermax wrote: »

Hi Guys,

Hopefully someone can help me out here with a simple question, My wife gave birth to our son 4 weeks ago and he has been given money from grandparents (around £700), we're looking to set up a bank account for him that and we will pay regular amounts (£20-£50pm) into ontop of the £700, we wont need access to the money as it will be given to him when he is 18 (Well, probably sooner so he can understand the value of saving).

I've been looking on the page about Childrens Savings and have picked out the following two options that seem the best:

Halifax Regular saver (4.5% AER) allows amounts from £20 - £100 to be paid in each month
Santander 123 Mini current account (3% AER) Allows unlimited amounts to be paid in.

My dilemma is that with the Halifax account we could only pay £100 a month, whereas the Santander we could pay the full £700 and earn interest in it straight away on the full amount,.

Can anyone advise the account we will make the best interest on, or if anyone else has a better option.

Thanks a lot

Jonny

The kids regular saver is a year only account so you would have to open one each year and the money saved is moved out each year, which doesn't sound like it matches what you are looking for.

I would also have a look at a JISA as this allows you to fund it each year and on 18 the money in the account is the child's, this only downfall to this is the child gets the money at 18 regardless of their financial understanding and could end up being frivolous with it.

Westie983

GunShotResidue · 10 March 2018 at 12:29PM

We have a Halifax Kids Regular Saver, it renews automatically each year, and the previous years funds are automatically moved into your nominated account, so you don't actually have to do anything.

I would put the £700 in either the Santander account or the Halifax JISA (which is also 3% at the minute). Then set up the regular saver for the £20-50pm you want to save and ask to have it moved into the account with the £700 in at the end of the year (ours moves into the Halifax young saver but I presume you can nominate any account).

mt99 · 10 March 2018 at 2:11PM

if you are saving for 18 years then you need exposure to the stock matket not savings accounts

Flobberchops · 11 March 2018 at 2:08PM

Lowermax wrote: »

Can anyone advise the account we will make the best interest on, or if anyone else has a better option.

Well, why not both accounts? Halifax Reg Saver as the "interest generation" account, and the resulting capital plus interest dumped into a more long term option on maturity each year. The Mini 123 can be either an "overflow" or "feeder" account as you see fit (in Year 2 onwards you can cycle the same cash back through the regular saver, up to the £100pcm limit). The name of the game is maximising the sum of money in the highest interest paying account, any extra goes in the next-highest account, and so on.

As others have mentioned the real long-term gains will be found by investing in a Junior Stocks and Shares ISA, which will accommodate just over £4000 of junior's money each year. However you indicated you'd like to be able to withdraw some cash before 18 to get your child accustomed to saving and budgeting, which I think is a great idea too. So, split your monthly savings between cash and stocks in whatever ratio you feel comfortable with; maybe £20 cash to every £30 stocks as a suggestion.

My own opinion is that you wouldn't keep all of your own wealth in just stocks, or just fixed term accounts, or just in instant access savings, so why do we save that way for our children? We want the same for them as we do for ourselves: long term growth, instant access for emergencies, plus a degree of certainty which you gain by holding cash. So, consider things like kid's regular savers, kids instant access savings, cash JISAs, stocks JISAs, Premium Bonds (a controlling adult can buy for a child or grandchild), and children's cash bonds once the the interest rate raises up to something that's worth a damn. Essentially, I think creating a basic portfolio for your child is a good idea. Others may think differently and I'm sure they'll make themselves heard presently!

Congratulations on the new arrival.

xylophone · 11 March 2018 at 3:47PM

Unless using the JISA, I would recommend keeping parental gifts separate from those made by other people.

https://www.gov.uk/savings-for-children

https://www.gov.uk/junior-individual-savings-accounts

The child has the right to access funds in the JISA at age 18 - he also has the absolute right to access to any account held in bare trust at age 18 (16 in Scotland).

http://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

https://moneytothemasses.com/quick-savings/parents/best-junior-stocks-and-shares-isa

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa?cmpgn=PS0517UKPABJI0001&gclid=EAIaIQobChMI8LT_tMHk2QIVLLftCh3GuAG5EAAYASAAEgJJYPD_BwE

http://monevator.com/using-vanguard-lifestrategy-funds-life/

Tom99 · 11 March 2018 at 5:20PM

Over 18 years a S&S JISA will probably do better than cash. My two have one with Cavendish.

Biggles · 11 March 2018 at 5:51PM

As per suggestions above; take your time while you consider stocks & shares options (he'll thank you for that in 18 years time).

Bank Account for New Born

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