Pensions for my kids

Cautiousiscool

My Mum has, very generously, given me £10K as savings for my kids: £5K each. The idea is that I should keep it in a savings pot (and add to it myself!) for when they're young adults. (They're 10 and 11 now). However, I'm thinking that it might be better use of the money if I put it in a pension fund for them. (They both have learning difficulties and are very unlikely ever to go to university, so I don't have that expense to worry about, but I do worry about their future ability to earn a living wage and provide for their own futures.) I'd be very grateful for any advice / opinions about investment for kids in general and about pensions in particular. Is it possible to invest a lump sum in a pension and then contribute a small monthly sum to it? Is there a minimum monthly amount you can contribute? I've been looking at the Cavendish stakeholder pension that Martin recommends - does anyone have any thoughts about that? Looking forward to your comments...

dunstonh

I'd be very grateful for any advice / opinions about investment for kids in general and about pensions in particular.

investments are no different to adults and nor are the pensions.

Is it possible to invest a lump sum in a pension and then contribute a small monthly sum to it?

yes

Is there a minimum monthly amount you can contribute?

£20

I've been looking at the Cavendish stakeholder pension that Martin recommends - does anyone have any thoughts about that?

The article covers it well. Do note that that it is woefully out of date though and the Aviva product, for example, has been replaced twice since that article and therefore the figures are wrong in that respect. However, the concept is still fine.

atush

The only proviso about pensions in your case is if they needed the money sooner (perhaps for some sort of independant living) or if their learning difficulties are linked to a shortened life expectancy.

Yes, once you hae set up a pension you can pay in monthly or lump sums or both.

You could consider doing both- a savings vehicle in cash (or investments into equities such as an investment trust savings plan) and a pension.

Cautiousiscool

Thanks guys. Next question... I've had a look at the Cavendish online site and there seem to be six different pensions to choose between. I'm afraid that the information given on each of them doesn't make much sense to me. How do I choose between them? I'm looking for something fairly low risk where I can contribute the minimum £20 per month at this stage (with a view to increasing the amount later). Any advice gratefully received .

dunstonh

How do I choose between them?

When you DIY, you have to do your own research. So, you decide on the basis of which one offers the investments you want, the features you want and most cost effective.

With small contributions, it doesnt really matter until you get to around £10k-20k in a pension. The differences will not be significant enough to be of concern.

Cautiousiscool

When you DIY, you have to do your own research. So, you decide on the basis of which one offers the investments you want, the features you want and most cost effective.

This is me doing my own research!

With small contributions, it doesnt really matter until you get to around £10k-20k in a pension. The differences will not be significant enough to be of concern.

Thanks.

atush

I think he meant check each one offered to see if it holds the investments you want to buy- so research funds you might like to investt in. Some are limited in the number of funds they offer.

JimmyTheWig

Surely someone here who knows more than the OP (I don't believe that I do) could at least point out the differences between the options to the OP.
I agree that no-one here should tell the OP which one to go for [likewise, I doubt that Martin _recommends_ the Cavendish stakeholder pension] but surely he is allowed a little help?

JimmyTheWig

As to the benefit of the pension as opposed to other methods is that the children don't get access to the money as (potentially) off-the-rails young adults.

Cautiousiscool

Thanks for the support Jimmy. Like you say, I was hopeful that someone who knows more than me could point me in the right direction, not by recommending a specific product but just by explaining the differences. I don't have either the time or the money to employ a Financial Services Adviser to help me with this. Never mind - I shall just resort to eeny-meeny-miney-mo!

atush

I am missing something- I thought I was being helpful. I guess not as you haven't thanked me.

I don't know what funds the different companies you can acess via Cavendish offer. But you can do some research on funds.

To start, decide what level of risk you are willing to take. Which areas of the world you want to invest in? Emerging markets? Uk? USA? Europe? Asia? Maybe Bonds? Investment trusts (my fav).

Then when you have thought about that look at some funds, check their performance, the philosphy behind them (if there is one but there won't be with Trackers for instance). Decide which ones you might like, then see if they are offered. Some here seem to like the AVIVA one the Cavendish. I dont' know what the funds offered are, but I do have one pension with AVIVA. Basically, it is the charges and fund choices that will be what makes your choice as the performance will be based on what you tell them you want to invest in.

Or maybe just decide sectors then invest in the funds within that sector that your chosen company does offer- easier and less research needed. But make sure they aren't lagging at the bottom of their sector as this means they aren't being run well.

The reason IFAs cost money is that they do all this FOR YOU. If you don't want to pay then be prepared to do the work.