best long term savings options for children

spdavies

Hi all,

My children (age 2&3) have each inherited £5k that is to be invested until they are 18.

I've tried to pay it into their existing child trust fund and Halifax savings accounts but have been told on both accounts that it is above the account limit (didn't know that there was one).

Can any of you reccommend the best savings option to invest in at this value that will reap the most rewards (lowish risk so not shares) for them when they are 18?

Thanks.

atush

Well, you won't get the "most rewards" that you and they want if you insist on not investing in shares. Investing in cash is by defalut low risk but low rewards as well. I was in the same position when I started investing for my children's future and I am very happy I went with shares. My eldest will graduate uni next year w/o debt. If had put the money in cahs it would have run out well before now. If you spread their investments over say 5 different funds or investment trusts, then you will have much less downside risk than investing in individual shares.

You can invest in NSI index linked certs that will at least keep them abreast of inflation risk if you insist on not taking the best route of long term investment.

Or you could put this years limit into the CTFs if you are happy with the reture you are getting. And ISAs for chilkdren are coming out soon I heard.

Ark_Welder

Perhaps wait until November to see what Junior ISAs have to offer.

DrSyn

1.If your looking for a term of 15years why are you against puting the money into shares?

2. There are a number of good low cost general, income and international INVESTMENT TRUSTS, which over this length of time if you reinvest the dividend income should produce much better returns than a savings account. If I remember correctly, there is a simple and cheap way for you to keep control of the funds untill they reach 18. Example: Temple Bar,

3. As a alternative to Investment Trusts maybe you could put the money into the low cost, HSBC FTSE All Share Index. This is an Index Tracker Fund.

4. If you are worried about timing the investment, "drip feed" it into the fund monthly over a year.

spdavies

Thanks for the answers so far.

I take two things out of your suggestions i guess:

1. Wait for the junior ISA's in November maybe
2. Don't necessarily write off share options

I currently have a cheque in their name with nowhere to pay it into so i don't really have the option of breaking it up and paying it into different accounts or drip feeding it.

I guess my nervousness around shares was to guarantee an return for them when they are 18 so avoid any high risk investment that could leave them with nothing. However if there are relatively low risk share options then maybe i should consider.

You mention the investment trusts - where can i get details of the currently best placed ones?

tillycat123

How about the NS&I savings certificates

I took this out for my son last month with me as trustee. Quite simple to do.

http://www.nsandi.com/savings-index-linked-savings-certificates?ccd=NQZAAE

atush

I did mention NSI ilscs in my post earlier. They will be the best option for cash.

While you are waiting to decide what to do, open savings accounts for your children and put the money there. Dont' forget to fill out the paperwork to get the interest gross.

As for investment trusts, go to trusnet and other finacial webistes. I would suggest a good general inv trust like F&C, Alliance, Witan etc and drip feed the money in each month. You can do this thru your own acct if you like.

DrSyn

1.You can find ratings of investment trusts at the following two sites:
www.trustnet.com

www.morningstar.co.uk (Look under closed end funds)

2. Many of the IT's run savings schemes you so "drip feed" the money in monthly for as long as you want.

3. You might like to take a look at the following site for some back ground reading on saving & investing, (its worth it)

www.candidmoney.com

Good luck!

spdavies

I'll have to be honest i'm a still a little nervous about investments especially given that its not really my money to be playing with.

If i asked the question slightly differently - what is the best savings account open to me at the moment given that I have to pay a single cheque in that is in my sons name - what savings accounts are the best at this point in time?

DrSyn

This question is a bit like asking "How long is a bit of string?" No one can foretell the future, so it all depends on what you mean by best savings account!

Examples: If you mean

1. Safest and guards against inflation with a little bit on the top. Then I would say "NS&I Index Linked Savings Certificates" if you can buy them for your son.

2. Best interest rate, then you can find these the "best savings tables listed at the following two sites:

www.thisismoney.co.uk

www.moneyfacts.co.uk

Before you put money into any institution remember
(a) The goverment guarantee is up to £85,000.
(b) Look up the terms of the account.
(c) If you see an account has a good rate, see if you can invest in that account for your son, even if that if that account does not have "children" infront of it. Or is not aimed at children.

dawyldthing

how about a 3 or 5 year saver? Then you can do the same again when they mature 3 times over. I believe theres 5% for a 3 year saver which would make 250 pounds a year so if you get similar until they are 18 you'll roughly get it to 9000 then some more on the compound roughly so could set them up for a bit of money when older