Savings confusion!!!!!

SavingDad_3

I'm confused by the choice of it all!!
I only want to do 2 things.......
1. Have a "savings" vehicle that I can open with a £2k lump sum + put £80/month into for the next 15 years when my boys reach 18 and may go to uni. But not in their name.....
2. Have a good savings account up to a max of £3k that I can put the odd additional bonus into and get to "quickly" in case of rainy days.

Can you please help clear my befuddled brain.

Thanks

Llamatamer

For saving for your kids then National savings is worth a look, also the new Government Child Trust fund http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1108986373,87407, is worth investigating, not being a parent I know little about this.

Another possibility since you are looking to save a regular amount a month is a regular savings account (paying 7-8% interest depending on who with), but this only last for a year so would need constantly updating.

Finally since your looking for such a long term investment then stock market may be worth a look, again Im not hot on this as not dabbled yet.

For your second aim, saving upto 3K max a year for a rainy day, then assuming your a tax payer an Indivdual Savings Account (ISA) is what you need see (http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1077487692,12362,) for specifics or go to the ISA board. Providing you dont save more than 3k in any one tax year the interest gets paid tax free.

To get more in depth stuff about all this have a read through some of Martins great savings articles on this site. http://www.moneysavingexpert.com/articles.phtml#Savings

Hope this helps in someway. Good luck

cloud_dog

SavingDad wrote:

I'm confused by the choice of it all!!
I only want to do 2 things.......
1. Have a "savings" vehicle that I can open with a £2k lump sum + put £80/month into for the next 15 years when my boys reach 18 and may go to uni. But not in their name.....
2. Have a good savings account up to a max of £3k that I can put the odd additional bonus into and get to "quickly" in case of rainy days.

Can you please help clear my befuddled brain.

Thanks

SavingDad, in response:

1. Just open a savings account in your name and set up a standing order / electronic payment facillity from your bank to the savings account. The upside is that the money is your name (only you know it is technically assigned to your son(s)) so you decide when / if they are responsible enough to manage it. The downside is that you are likely a tax payer (possibly higher rate tax payer) so the interest will be taxed at your highest rate; whereas your sons will be able to claim the interest tax-free (IR form R85).

If you wish to proceed with your original option then I think ING will be a good provider. Their rate is very good (perhaps not the absolute best but very good) and the reason I like them is because you can create a number of sub-accounts within your customer account. For example you open an account with them "Mr SavingsDad" and create an an account "My Savings" you can them create additional accounts (online) for "No1 Son Savings" and "No2 Son Savings". You can create different SO from your bank account into the relevant ING account (each ING account whilst held under a single customer reference umberella has its own account number; you just add the ING sort code to your transaction).

2. Go for a good online, immediate access ISA. Again no particular prefernce but there are a number payin 5.something% (i'm currently with IF but will transfer shortly). The only downside to all this is that the Cash ISA limit will be reduced to £1k as from April 06.

My view on point 1. Depending on if your sons aready have savings accounts, if they *don't* I would strongly recommend opening accounts in their own name a) because it will be tax efficient (need to understand £100 tax rule), and b) because it will help them to understand financial decisions / responsibilities. You could always split your £80 to put £10 pm in an account in their name.

Secondly and this relates to point 2 also. Is there a Mrs SavingMum? If so, does she work? If not you could open up the accounts in her name (still recommend ING) and claim all the interest gross (subject to existing income levels).

Another alternative would be to open a Stocks / Shares ISA and invest in a high yeilding income fund. Not recommending but M&S High Income is currently yielding 6.something%.

We are doing something similar for our young daughter. She has a savings account in her name (gifted money goes in there unless it is aimed at the CTF), she will also have a CTF (stocks/shares) again in her name and we will contribute to this until we think it reaches a reasonable level (define reasonable???), but we are also using Mrs Cloud_dog ING account (she is a non-tax payer) to put aside cash savings for university, house, marriage, etc, etc.

Sorry for the essay but there are a lot of options. I would focus on what tax efficient options are available first.

cloud_dog