Godchild Savings Help

danger_mouse_2

My partner has been asked to be godmother and was looking at setting up some sort of account to put money in on a monthly basis until she is 18 or 21, the problem is im not sure were to start.

Is it easy to set up or will the banks require a million pieces of I.D and have her jumping through hoops?

secondly, what sort of account would be best? theres lots of things about child trust funs, isa's but to be honest i dont understand them enough to know which we sould be looking at.

one thing i can def say is i dont think shes gonna want to be taking any big risks on the money invested, obv its not going to be huge amounts of money but wed like it to be fairly safe.

hopefully someone can point us in the right direction, in the mean time ill crack on with a bit more reading.

Reaper

You can cross ISA off your list as babies can't have them, so that is only an option if you take one out on your own name (if you have not already used up your annual allowance) then gift the money to her at the end (not a bad choice but note there is a potential inheritance tax liabilty doing this).

The parents will be setting up a Child Trust Fund to put their £250 government voucher in to so the simplest option is simply to contribute to that, though note the maximum that can be added is £1200pa so if the parents are already planning to contribute all that then you will not be able to add any more.

If neither of those 2 options is suitable then you can set up a savings or investment account in her name. I'll spare you the details for now unless you decide to go that route.

danger_mouse_2

Reaper wrote: »

You can cross ISA off your list as babies can't have them, so that is only an option if you take one out on your own name (if you have not already used up your annual allowance) then gift the money to her at the end (not a bad choice but note there is a potential inheritance tax liabilty doing this).

The parents will be setting up a Child Trust Fund to put their £250 government voucher in to so the simplest option is simply to contribute to that, though note the maximum that can be added is £1200pa so if the parents are already planning to contribute all that then you will not be able to add any more.

If neither of those 2 options is suitable then you can set up a savings or investment account in her name. I'll spare you the details for now unless you decide to go that route.

cheers for that, def told me more in 2 mins of reading than i have in the last hour!!!

would a savings account be easy to set up for her, to be honest something that would allow us to DD money once a month and allow to add extra at say birthdays or christmas.

sorry if i seem dumb, partly because i am but ive never had to look at these sort of things so dont know were to start

Jake'sGran

Trouble is the rates for savings are so poor at the moment but the money will be very safe. You will be lucky to find a savings account which allows smallish sums each month and which pays 2.5%. The best accounts are those that are fixed for two years or so but these usually have a minimum amount to be deposited.

If you click on Banking-Saving at the top of the page I believe there is a section about saving for children. For my grandchildren I used to put money into an Investment Trust at Christmas every year. These have low charges. Another option is a regular saver account in which you deposit the same amount each month. The rates on these look good but you need to calculate how it works.

Reaper

As Jake' Gran says if you want to open an account for her yourselves the first choice is savings or investments.

I sense you instinctively prefer savings accounts but there are a few negatives to be aware of. Interest rates are currently low and in almost all cases not even keeping up with inflation. Also the best rates are regular saver accounts which require you to commit to a min/max contribution each month. Nomally they expire after a year after which you have to decide what to do for the next year.

If you want to go the savings route start by reading Martin's child savings article.

Personally I would favour investments and have indeed myself opted for an Investment Trust as did Jake's Gran. In theory the stock market ought to always outperform savings over the long term and as it involves a child it is for the long term. I chose this one but there are lots of other options out there.