Savings for Grandchildren - best bet ?

muirri

Now I'm a grandad i'd like to start savings for my Grandson (and any future grandchildren) - looking to put a small sum of money - say £20 a month - to be used when he is 18 (or thereabouts).

Whats the best options - Savings account / Trust fund ?

Not looking for this to be high risk at all but something there for when he turns 18 and needs money for Uni etc

Lokolo

http://www.halifax.co.uk/savings/childregularsaver.asp

As its money from grandparents, interest can be tax free if you fill in an R85 form. However the account would need to be made in their name (but I believe you can have it 'in trust' so he can't get access).

However, this is a regular saver so you would need to open one each year to get the good rate.

You can then transfer the money to:

http://www.halifax.co.uk/savings/children.asp

This account, which is a lot less interest unfortunately.

You are also likely to have inflation risk because of the lower rates.

cloud_dog

muirri wrote: »

Now I'm a grandad i'd like to start savings for my Grandson (and any future grandchildren) - looking to put a small sum of money - say £20 a month - to be used when he is 18 (or thereabouts).

Whats the best options - Savings account / Trust fund ?

Not looking for this to be high risk at all but something there for when he turns 18 and needs money for Uni etc

Based on what you have said here, I think your best option is to open a savings account in your name, preferably an ISA (if you have the spare capacity).

If you open it in the childs name all the money belongs to the child. you also need to ensure the account allows for an 'in trust' designation to 18 (most do) or 21 (some do). also it would be up to the child what they spend it on.

kennyboy66_2

It doesn't make a great deal of sense using an ISA when the non ISA accounts pay more.
And of course your grandchild would not pay tax.

The Halifax a/c mentioned by Lokolo is terrific.

Grandma does it for my 2 then sweeps it into the best available account at the end of each year, then starts again. I think the Halifax a/c has been going for around 5 years so heopefully it will keep going.

cloud_dog

kennyboy66 wrote: »

It doesn't make a great deal of sense using an ISA when the non ISA accounts pay more.

Yes, absolutely agree go for the best paying overall account but, bear in mind this is a long term savings.

kennyboy66 wrote: »

And of course your grandchild would not pay tax.

The Halifax a/c mentioned by Lokolo is terrific.

Grandma does it for my 2 then sweeps it into the best available account at the end of each year, then starts again. I think the Halifax a/c has been going for around 5 years so heopefully it will keep going.

All due respect but, I assume you actually read my post, digested the highlighted bits and considered the implication of these aspects? What your Grandma does, does not meet the needs of the OP, unless the OP wants to update clarify things.

Also, I hope Grandma keeps the money in the childs name otherwise that is called fraud.

Jake'sGran

I saved for my two grandsons since they were very young and I used an Investment Trust i.e. The Alliance Trust. It has been around a long time and has a fine reputation.
You can check their performance over 3 or 5 years. There are only a few funds that will accept £20 monthly but you can easily find which they are. M&G might be one and maybe Fidelity or just Google for the info e.g."FUNDS WHICH ACCEPT £20 MONTHLY PAYMENTS". This is a good way to save for a child. Don't use a regular payment bank or building society account. They offer good headline rates but don't explain how the account works.

If you could afford to put away £3000 per annum in a joint account for them there would be no tax to pay as long as you live for seven years longer. You could then choose the best paying fixed rate account which usually means locking the money in for 3-5 years.