Savigs for children

Tonytiff

I am looking to deposit a sum of cash, to sit for some 18 years, for the benefit of my new grandchild. I have come across a 5 year child bond from the Clydesdale bank. paying 4% fixed. is this worth persueing please.

Reaper

Personally I would not use a savings account for a child because you will struggle to keep up with inflation. Current inflation is either 3.1% or 4.7% depending which measure you are using.

Over the long term (and 18 years is certainly the long term) investments ought to outperform savings. To save me repeating myself here is another thread where I discussed this option:
https://forums.moneysavingexpert.com/discussion/2723699

If you are set on savings accounts then be prepared to keep moving it around to keep up with the best rates as the banks always lower old account rates over time. There is an MSE article on child savings here.

Cautious_Investor_3

Hi

If you are looking at saving for an 18 year period then conventional wisdom would dictate that investments in equities (stocks and shares) would beat deposit accounts. Furthermore, and as Reaper rightly says, the interest rate you get on deposit accounts will struggle to keep up with inflation. But if you don't want to take any risk with the capital (although you will run the risk about inflation) then a deposit account is what it has to be.

However my research shows that the Clydesdale Bank account is pretty good, you can get better if you are prepared to pay money in on a regular basis.

As Reaper says you will need to keep an eye on the interest rate if you do go for a deposit account, these pesky banks do like to quietly reduce their rates!

I hope this helps.

The Cautious Investor