Help me choose a savings account for small amounts over long period

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specialhat
specialhat Posts: 182 Forumite
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I am putting £4 a month aside for my nephews' 18th birthdays, when I will give them each £400, so it's nice and fair and a round figure.

One will be in 2028, the other in 2029!!

So I am looking for a very specific type of savings account. I have no need to access it for many years, but I want to make a very small monthly deposit.

I am thinking that the Virgin Fixed Rate E-Bond might be the way to go as it allows for small deposits.

http://www.northernrock.co.uk/savings/find/savings-accounts/Virgin_Fixed_Rate_E_Bond_Issue_16/?utm_source=VirginMoney&utm_medium=WebVMFREBond16&utm_campaign=Savings&utm_content=SavingsAccountPage

Do you have any other suggestions please? I may as well earn a chunk of interest while I'm saving for them and still be a nice aunt. ;)

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  • specialhat
    specialhat Posts: 182 Forumite
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    Better than that Virgin one? I couldn't find any with a better rate that would let me save such small amounts, but was worried I was looking in the wrong place.
  • innovate
    innovate Posts: 16,217 Forumite
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    There are quite a few fixed rate savings account which start from £1 min and pay more than Virgin.

    http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#twoyr

    An alternative could be that you (or their parents) open accounts in their names. One of the advantages would be that they get the interest tax free, so you (they) effectively get a better interest rate.
    http://www.moneysavingexpert.com/savings/child-savings-tax-free
  • ctdctd
    ctdctd Posts: 1,080 Forumite
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    specialhat wrote: »

    I am thinking that the Virgin Fixed Rate E-Bond might be the way to go as it allows for small deposits.

    The Virgin one will only accept deposits while the account remains available for new savers - so when they replace it with a newer issue, you won't be able to add to it.:(

    I would suggest you maybe try the Halifax Kids Regular Saver
    http://www.halifax.co.uk/savings/accounts/branch-accounts/

    You could open one account in one nephews name and get 6% a year tax free - when they get to 18, divide the balance by two. You would need to open this account with £10 and add £10 every month to get the 6% rate.

    After a year, move the balance to the best instant access account you can find - again in the nephews name to get the interest tax free. If available, start another regular saver as well.

    If you don't want to open new accounts every year, just choose the best savings account you can find that accepts deposits for ever and does not have a short term bonus. Something like the YBS regualr saver maybe - again, you need to deposit £10 per month?
    http://www.ybs.co.uk/savings/regular/regular_saver.html
    Keep an eye on the interest rate though and open in the childs name to make it tax free!

    It is important to try and get an interest rate at or above the inflation rate - if not, the amount you can give your nephews will get smaller in real terms.:(

    HTH
    Do Money Saving sites make you buy more bargains - and spend more money?
  • innovate
    innovate Posts: 16,217 Forumite
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    ctdctd wrote: »
    You could open one account in one nephews name and get 6% a year tax free - when they get to 18, divide the balance by two.

    Don't think you can split anything - - the money is the nephew's onec the account is in his name, only he can decide what to do with it.
  • ctdctd
    ctdctd Posts: 1,080 Forumite
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    innovate wrote: »
    Don't think you can split anything - - the money is the nephew's onec the account is in his name, only he can decide what to do with it.

    The adult has control of a childs account up to their 16th birthday I think?
    So, split it then and carry on to 18 maybe?
    Do Money Saving sites make you buy more bargains - and spend more money?
  • xylophone
    xylophone Posts: 44,427 Forumite
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    Open an account in bare trust for each child - you will need the parent to sign the R85s. The "Little Rock" might do for a start. (Up to age 16)

    You could move the money to another account in bare trust before 16th birthday. See what happens about R85 at age 16 here http://www.hmrc.gov.uk/tdsi/children.htm
  • specialhat
    specialhat Posts: 182 Forumite
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    Thank you very much for all your advice.

    Unfortunately most of them require me to save more than I am able to, so I may stick to the Egg account I am already using. The interest isn't great, but it's easy, online and already up and running.
  • xylophone
    xylophone Posts: 44,427 Forumite
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    more than I am able to,
    http://www.northernrock.co.uk/savings/find/savings-accounts/Little_Rock_Access_Account_Issue_2/

    You said £4 a month? You can open with £1.
    This account accepts additional deposits of £1 a time.
  • ctdctd
    ctdctd Posts: 1,080 Forumite
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    xylophone wrote: »
    http://www.northernrock.co.uk/savings/find/savings-accounts/Little_Rock_Access_Account_Issue_2/

    You said £4 a month? You can open with £1.
    This account accepts additional deposits of £1 a time.

    Good spot - that looks ideal - and 3% interest just about keeps pace with inflation.

    Not sure what EGG account the OP has but their current one is offering a heady 0.6% including a 0.1% bonus :eek::rotfl:
    Do Money Saving sites make you buy more bargains - and spend more money?
  • specialhat
    specialhat Posts: 182 Forumite
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    The Little Rock looks promising, thank you!

    (That's not the Egg account I have - although it's not much better! I do have a even older one at 2% though)
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