ISA for 18th birthday gift

ButterflyBee

It is my daughters 18th birthday and I have decided that as I do not have money to waste, her present will be a £150 ISA fixed for as lon as I can. It looks like the best offer at the moment for a "small" value as this is only one year at a time. Does this mean that I will need to re invest every yera or will she as the ISA will be in her name.

xrjtg

Once the money is in her name your daughter would have to manage it, but if you fixed for five years it wouldn't require any attention over that time.

ButterflyBee

Many thanks, I will most defniatley look for a fixed ISA. Info much appreciated.

MoneySaverLog

Or may be look at Index Linked Saving Certificates

triplea35

ButterflyBee wrote: »

It is my daughters 18th birthday and I have decided that as I do not have money to waste, her present will be a £150 ISA fixed for as lon as I can. It looks like the best offer at the moment for a "small" value as this is only one year at a time. Does this mean that I will need to re invest every yera or will she as the ISA will be in her name.

I appreciate that you do not have money to waste but at the end of the day when you give it to your daughter for her birthday it is her money. I personally think that putting £150 away in a fixed rate ISA which will be worth a little over £180 in five years time is not going to be much of a memorable/exciting gift for an eighteen birthday.

Rather give your child the cash and discuss the options she has with the money. If she chooses to indulge herself in some luxury or frivolous item then it is her choice and is all part of life learning process.

ButterflyBee

Oh I have already bought the gift she wants.This I thought will be a good starting lesson in adult life, instead of handing over cash that I know she will spend on her friends.
I wish My partents had taught me how important savings were as a young adult.

atush

Although I understand oour point in this, I do agree with the above post. 180 after 5 years may not be worth the grief you will get.

If you want to invest it, so that it isn't easy to spend, I'd consider instead putting the 150 into a S&S isa as that would at least have the possiblity of growing larger. And although it could fall in value, at least it will not have been spent on fripperies.

CLAPTON

I don't understand how you can legally open an ISA for some-one else; they have to sign to say this is their only ISA
Rather than teaching her about the importance of saving or managing money you are preventing her opening an ISA that may be better suited to her needs.
Teach her about money but let her make the decisions.

Loughton_Monkey

Clapton has a very good point.

Firstly, you cannot legally open such an account in her name. She must do that. But let's just run with the idea that you give her the cash and walk her down to [say] Halifax and let her take out a 5 year fixed rate ISA for £150 in her own name.

This is not a 'clever' way of teaching her how to save/invest. Since what you have done is prevent her contributing any more money to an ISA this tax year! Similarly, she would not 'thank' you very much in two years time when she is sitting looking at the 5% interest, if/when any old bank is giving 6% on instant access accounts - and she is forced to sit there for another three years on such a 'low' rate.

NS&I Index Linked bonds look a far better bet to me.

k9oky

"This is not a 'clever' way of teaching her how to save/invest. Since what you have done is prevent her contributing any more money to an ISA this tax year!"

isa allowance is £5340 in any one tax year, so even if the father puts £150 in a fixed rate product you still have £5,190 to invest this tax year in any other cash isa product. but more importantly it's nitpicking as for you to judge whether his action would be clever or not you have assumed you know as much about his daughter as he does - which is a fairly academic way to look at this rather than empirical. do you think she would have invested a full allowance into the isa this tax year? i'm taking a guess that the father knows the answer to this and therefore has come up with the conclusion that the answer would have be a definite no, and so has decided to actually show his daughter this is how we save, heres a start.

Similarly, she would not 'thank' you very much in two years time when she is sitting looking at the 5% interest, if/when any old bank is giving 6% on instant access accounts - and she is forced to sit there for another three years on such a 'low' rate.

I definately agree with you 100%, but if this were the case then you would have to sit down with a pen and paper and do the maths since it's less obvious than it looks, by just the headline figures at this momment in time since you have to look at the past 2 years when the rates were lower you managed to leap ahead for those 2 years, yes you are now beginning to loose out 2 years in but during the lower rates for the first 1-2 years you had moved ahead by some. Not only that a fixed rate means that it's definately staying in. I would only tie myself into 2 year at the very max though, although it's entirely his decision. And you make a great point Monkey.

Lokolo

k9oky wrote: »

"This is not a 'clever' way of teaching her how to save/invest. Since what you have done is prevent her contributing any more money to an ISA this tax year!"

isa allowance is £5340 in any one tax year, so even if the father puts £150 in a fixed rate product you still have £5,190 to invest this tax year in any other cash isa product. but more importantly it's nitpicking as for you to judge whether his action would be clever or not you have assumed you know as much about his daughter as he does - which is a fairly academic way to look at this rather than empirical. do you think she would have invested a full allowance into the isa this tax year? i'm taking a guess that the father knows the answer to this and therefore has come up with the conclusion that the answer would have be a definite no, and so has taken it by the bull of the horns and decided to actually show his daughter this is how we save, heres a start.

You cannot contribute new money to 2 cash ISAs simultaneously. As fixed term ISAs tend to (and the Halifax Fixed Term ISAs do 100%) only allow 1 deposit it would mean that the rest of the ISA allowance is lost as the OPs daughter cannot open a new ISA elsewhere to deposit more money, nor can she deposit money in the current ISA as it only allowed one deposit which has been used up.