My Baby is being given some money?

Liney_2

I spoke to my Grandma today, her and my Great-Uncle have sent £800 cash down with my Mum for her to give me for my new baby.

I am overjoyed but realise my baby is rapidly becoming richer than me! lol

Any ideas on how best to save the money for him?

He has an 'under 7' account with Nationwide with £400 in a and Child Trust Fund acct with Nationwide with the £250 quid voucher from Tony Bliar.

I am wary of investing in stocks and shares etc

thanks in advance

Becles

It depends what you want to do with the money.

If you put it in the Nationwide account, he will be able to access it when he's a teenager where there is a temptation to blow the lot on CD's etc :rolleyes:

If you want to keep it long term, I would look at something that you can put in trust until he is 18 or 21. Hopefully he will be more responsible then and keen to spend it on something useful like getting through uni, or towards a house deposit.

I know you said you are wary of stocks and shares, but there are different levels of risk. Something low to medium risk could produce a much better return over 18 years that a childs savings account. You would need to get specialist advice from an IFA, if you wanted to look into this route.

If you want to keep it as cash, you can always set up another savings account elsewhere in his name, but not tell him about it until he reaches the age when you want him to know about it.

My two got some money from a will a few years back, and I put it in a couple of medium risk unit trust funds and it's done really well so far. Past performance isn't a guide to the future and all that though. That's tied up in trust until they are 18. My eldest is already talking about uni courses (he's 9!), so hopefully it'll be a nice bonus to help him through his studies.

msmicawber

What a lovely gesture. I suppose you need to decide whether you want to take a safe approach where you get guaranteed returns, which tend to be smaller, or whether you want to try riskier investments since your son's very young and, over the long-term, the effects of any drops in interest or investments that don't turn out to be as good as they first looked, should iron out.

Have you looked into the Child Trust Fund that the Government brought out a few years ago? You're entitled to some money to get the baby's savings started, but I'm not sure what the annual limits are for topping up the savings. There's information on this web site:
http://www.childtrustfund.gov.uk/

My father bought both of my children Children's Bonds. They're kept in trust with you as trustee until the child is 16, after which your son can control it himself. They don't get the highest of returns, but every 5 years there's a bonus and you can cash them in at any time if you wish to reinvest elsewhere. They've doubled in valud in 10 year and are tax free.

My FIL also bought my daughter premium bonds from which she has had a £50 prize - similar to interest in a BS, I suppose. You can also take the money out to reinvest at any time.

They're both available from National Savings: http://www.nsandi.com/

margaretclare

Put it into the Trust Fund and allow it to grow.

Over 18 years the stock market will go up and down, but overall more people have made money out of stock market-type investments like unit trusts than have made money sticking it into an ordinary savings account. Savings accounts are usually considered to be short-to-medium term, stock market linked are considered to be medium-to-long term i.e. 5 - 10 years or longer.

We have some good friends who had a baby late in life - he married late, they needed IVF to conceive at all. Every last penny they can spare goes into little fella's Trust Fund. They don't want anyone to buy him toys for Christmas or birthdays - he already has all the toys he can play with - and they ask for money instead. As they told us only a couple of weeks when we were up there and visited them, Dad will be well retired by the time little fella thinks of going to Uni (he'll be 3 in December). Mum works only one shift a week because she doesn't want to waste these precious years with him. I wish more people thought the way they do.

Margaret

Phatmouse

Spend it on GIN!!!!!

No really I have no idea what to do with the money my baby is getting from relatives. I want to choose the right one but there are so many out there. Nice to have the EXTRA responability though:D

djtonyb

Premium Bonds are a good option. No interes paid out but there is a chance to win £1,000,000 each month

You can withdraw the funds at anytime and reinvest.

My lo had £100 invested for the last year and has had 2 x £50 payouts

Liney_2

I think I will get him £100 worth of Premium Bonds and will see what happens.
The rest is going in the bank today until I decide whether to invest it. Thanks everyone.