Investing Money Long term For Nephew

norman_undercroft

I have about £3k to £4K I wish to invest for my nephew who is 11 years old.

I want the money locked away until he is 21 and I do not want the tax man to benefit from any of it now or later nor do I want his parents to be able to get their hands on it before it becomes his when he attains the age of 21.

Question what tax free savings vehicle can I use that will give him maximum benefit and as a minimum payout the capital I pay in and at the same time be a product I can set up without his parents knowledge?

jimjames

It sounds like an ISA in your name may be the only way you reach all the requirements that you have specified. Most other options will break one or more of the items you have said are needed.

Loughton_Monkey

You need to be quite clear. You mention 'invest' but later 'stipulate' [if I read your last paragraph correctly] that the capital must be 'safe'.

Since you are talking about a ten year period, it would generally be considered 'most unlikely' that a well balanced investment fund would be worth less in 10 year (in cash terms anyway). But of course this cannot be guaranteed.

The 'trouble' with savings (where the capital is safe) is that the value of the cash is unlikely to keep up with inflation and hence could be worth less, in spending power, when he is 21 than it is now.

This is really a personal decision you must make. There are no rights and wrongs. One route is totally safe, but with a risk of devaluation. The other route is less safe, and still, of course, could devalue, but it does give a very decent opportunity and possibility that the value of the investment might increase.

If I were to doing this personally, I would put it into a 'Balanced managed' fund and let it ride, possibly looking to sell it in around 8 to 9 years if it had shown good growth - simply to protect from a significant crash a month before his 21st birthday! But in no way would I seek to persuade anyone that this is the 'correct' answer, because there simply isn't one.

And as mentioned above, I think using your own ISA allowance is the only realistic vehicle.