Where to invest £5000 for my 14 year old

cjj_2

Hi
Im looking to invest £5000 for my child. Was thinking of Yorkshire bs child bond for 5 years at 4.25%. It wont be needed for 5 years but I am worried about fixing with withdrawals not permitted in case the interest rate goes up. Lots of accounts I have looked at are not for under 16s. Can anyone recommend a decent account that a child can get. Just thought I would ask in case I had over looked anything. Thanks in advance x

atush

Where is the money from? If it is from you, you could be liable for tax on it. Children can only receive 100 quid a year in savings interest tax free if the money comes from their parents. When will the money be needed? 18? Uni? earlier?

I would look at the new Junior ISAs, and invest the 3600 allowed into a cash one if you can find a good rate. This would allow you to transfer it later when rates rise and still keep the interest tax free.

Consider investing some of it into equtiies perhaps via an investment trust savings plan. Maybe 50-100 per month for a year or so. Given you have possible 4-5 or more years until the money is needed this could help you stay above inflation. Put the rest in an easy access savings acct or drip it onto a halifax children's regular saver.

oldvicar

Maybe if when aged 17 you have an irresponsible 'wild child' you might want to lock it away until they are more responsible, but for now I think you are wise to seek an account where the funds can be accessed if needed (perhaps wiith a penalty in exchange for a decent fixed rate).

Apart from (adult) ISAs, and 'over 50s' accounts, most accounts available to adults will be availble to invest in. If the £5K is your money you are giving to the child then you will have to pay the tax on the interest, in which case a tax-free Junior ISA might appeal (just 3% from the Nationwide and Skipton at present)

cjj_2

hi and thanks for the quick replys.
Didnt think of the tax side of it. I dont pay tax but oh does. Will this make a difference ? The money is what ive saved for him over the years but held in my name due to better interest rates on adult accounts. Rate just finnished and I thought I might look at putting the amount I have saved in his name x

Uncertain

cjj wrote: »

Hi
It wont be needed for 5 years but I am worried about fixing with withdrawals not permitted in case the interest rate goes up.

On the other hand you will have been getting a higher rate than you would have got unfixed all the time until it does go up.

cjj_2

Hi and thanks everyone.
Been doing some research on the tax issue mentioned. Am I correct in thinking that the interest would only be taxable if it was over £200 per year. I have never been in a possition to gift him money before. TIA x

atush

I thought it was 100 a year interest.

But if taxed and you give it(not your OH) it would be taxed at your nominal rate (not the OH's HRT). But if you put 3600 into a Junior ISA then that would be safe, and the rest won't earn over 100 quid per year?