Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • jonwilko
    • By jonwilko 16th Oct 16, 7:49 PM
    • 3Posts
    • 0Thanks
    jonwilko
    Buying Gold with Child Trust Fund
    • #1
    • 16th Oct 16, 7:49 PM
    Buying Gold with Child Trust Fund 16th Oct 16 at 7:49 PM
    Hi
    my first post on MSE so be gentle, I am not much of a financial wizard!

    My question is, is it wise to buy gold as part of my son's child trust fund?
    He is 7 and I am looking at a period of 11+ years until it is his to manage.

    I got a bit disillusioned with the paltry interest rate at his bank so have decided to set him up an ISA with Coventry at 3.25% -all common sense.

    I have also been looking at putting some into gold- my question is, would any bullion I buy be exempt from capital gains tax as it is for a child's trust?

    I know sovereigns are exempt as they are legal tender but I would get a better deal with bullion or non numismatic coins. However, I would obviously wish to avoid my son paying 20% CGT when we came to sell the gold back.

    And finally, how long is a piece of string...I am looking at putting about 30% of the value into gold and about 30% into the ISA. Do you think buying gold is a wise move over 11 years? I have looked at websites and there does seem to be a generally upward trend.

    Thank you and any advice gratefully received.
Page 1
    • jimjames
    • By jimjames 16th Oct 16, 7:58 PM
    • 10,836 Posts
    • 8,902 Thanks
    jimjames
    • #2
    • 16th Oct 16, 7:58 PM
    • #2
    • 16th Oct 16, 7:58 PM
    As far as I know you can't put gold itself into an ISA but you can buy gold funds.
    But if you want to get better returns than cash why aren't you investing in stock market funds?
    Remember the saying: if it looks too good to be true it almost certainly is.
    • le loup
    • By le loup 16th Oct 16, 7:59 PM
    • 3,373 Posts
    • 3,031 Thanks
    le loup
    • #3
    • 16th Oct 16, 7:59 PM
    • #3
    • 16th Oct 16, 7:59 PM
    Gold is worth what people will pay for it.
    It generates no income.
    Some people like to wear it.
    It is extremely volatile.
    It does not tarnish.
    What is the value today in sterling compared to it's value 20 years ago?
    • jonwilko
    • By jonwilko 16th Oct 16, 9:34 PM
    • 3 Posts
    • 0 Thanks
    jonwilko
    • #4
    • 16th Oct 16, 9:34 PM
    • #4
    • 16th Oct 16, 9:34 PM
    Thanks both...but I think I didnt explain myself clearly. I should have said the trust fund is partly invested already in stocks and shares, and he also has a savings account (hence the poor interest rate)

    The ISA is separate to the gold purchase, so all I need to know is whether you will pay CGT upon selling when you buy gold using a child trust fund. This would influence whether I bought sovereigns or bullion.

    The salesman at the gold bullion company did not know himself.
    • jonwilko
    • By jonwilko 16th Oct 16, 9:51 PM
    • 3 Posts
    • 0 Thanks
    jonwilko
    • #5
    • 16th Oct 16, 9:51 PM
    • #5
    • 16th Oct 16, 9:51 PM
    You only pay CGT if you make 11000£ profit in any given year, so highly unlikely given the amount I am buying for him.
    • Kendall80
    • By Kendall80 16th Oct 16, 10:02 PM
    • 818 Posts
    • 529 Thanks
    Kendall80
    • #6
    • 16th Oct 16, 10:02 PM
    • #6
    • 16th Oct 16, 10:02 PM
    I have Investec Global Gold on my watchlist. A fund which invests in shares of gold exploration/mining companies.


    Can you convert your boys CTF into a JISA? You get a broader range of investments to choose from then I believe.
    • bowlhead99
    • By bowlhead99 16th Oct 16, 10:29 PM
    • 5,087 Posts
    • 8,990 Thanks
    bowlhead99
    • #7
    • 16th Oct 16, 10:29 PM
    • #7
    • 16th Oct 16, 10:29 PM
    The ISA is separate to the gold purchase, so all I need to know is whether you will pay CGT upon selling when you buy gold using a child trust fund. This would influence whether I bought sovereigns or bullion.

    The salesman at the gold bullion company did not know himself.
    Originally posted by jonwilko
    In your thread heading you refer to a Child Trust Fund (with the C, T, F capitalised) which is a specific government approved tax exempted investment product, the predecessor to the Junior ISA (and whose assets can be transferred into a Junior ISA).

    There are no taxes to be paid on income or capital gains made inside a CTF wrapper but there are restrictions on what types of assets can be held. You can't just go and buy a lump of metal or some antique paintings or fine wines or patches of land that you think have potential to go up over time, and say, "this is for my son's CTF". It is the CTF product provider who acquires the assets and can only buy qualifying assets that meet the government's rules. Which doesn't allow it to hold a handful of coins or collectibles or a safe full of gold ingots.

    If you mean your son's trust is just a bare trust or family discretionary trust that you set up with a solicitor and is not part of the government's 'Child Trust Fund' scheme, then the trust or the child is taxable in line with "normal" income tax and CGT rules, and so yes it would matter whether you bought CGT exempt UK currency such as sovereigns or Britannias, versus other non-exempt coins or metal.

    Assuming you mean what we think you mean when you say child trust fund, you can't buy gold with it so the point is moot. You might like to update the CTF to a JISA (which is typically a more flexible and competitively priced product, given CTFs are no longer available to children born today). Plenty of JISA managers would allow you to buy exchange-traded commodities products, although still not physical chunks of gold.
    Last edited by bowlhead99; 16-10-2016 at 10:34 PM.
    • DiggerUK
    • By DiggerUK 17th Oct 16, 5:46 AM
    • 2,580 Posts
    • 2,421 Thanks
    DiggerUK
    • #8
    • 17th Oct 16, 5:46 AM
    • #8
    • 17th Oct 16, 5:46 AM
    For 11 years plus, gold is perfect. Best held for five years plus.
    I would suggest one of the ETF's that are fully backed by physical gold..._

    These links will give you a good starting point..._

    http://moneyweek.com/a-beginners-guide-to-investing-in-gold/

    http://goldprice.org
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • atush
    • By atush 17th Oct 16, 10:42 AM
    • 15,277 Posts
    • 9,157 Thanks
    atush
    • #9
    • 17th Oct 16, 10:42 AM
    • #9
    • 17th Oct 16, 10:42 AM
    For 11 years plus, gold is imperfect. It does nothing, and pays no income. Sure, buy them a gold sovereign or something if you like, but in general, invest.

    Invest in equities incl Funds and investment trusts for periods over 10 years.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,948Posts Today

6,222Users online

Martin's Twitter