Best way to invest £20,000

baronsdale

my father in law has give me £10,000 for each of my two children whats the best way to invest this money for their later life ?

newfoundglory

How old are your children?

baronsdale

6 and 4 her dad want me to put intp premium bonds but not sure thats the best investment ,

CLAPTON

premium bonds aren't an investment: you are simply gambling with the interest you would earn if you put them in a savings a/c.
what would happen if one of the children had a big win and the other didn't?


as their ages I would suggest stock market investment; unit trusts or similar

newfoundglory

Exactly - if this is a 10 year investment, a stock market product could be ideal.

Of course, you could split the money and put some into a fixed rate bond for 3 to 5 years - and some into stocks and shares.

baronsdale

i didnt think premium bonds was a good idea how would i know the best place to put the money as banks would only advise on own product . never had any dealing with savings

xylophone

Premium bonds on the chance that they might win a prize and if they don't then the capital is being eroded in its entirety by inflation? In your position I wouldn't take the chance.

Do make sure that the gifts from Grandpa are documented in his records (with his copy of his will) and in yours.

Presumably each of your children has a CTF - you could consider placing additional money in these. Are you checking these to see that your children are receiving the best return possible?
http://www.moneysavingexpert.com/savings/child-trust-fund-vouchers - re changing to another provider as desired.

Otherwise you will hold any investment as bare trustee for each child with the money and capital becoming available to each of them at the age of 18.

At the simplest, you can open Building Society accounts for each child - you could choose accounts intended for children - see http://www.moneysavingexpert.com/savings/child-savings-tax-free
or other accounts with instant access (you might want to keep the money available in case National Savings Index linked bonds become available again) or fixed terms - look up best buys in the savings tables
http://www.moneysupermarket.com/savings/

See this http://www.hmrc.gov.uk/tdsi/children.htm concerning children and interest, bare trusts for children and what happens at the age of
16. http://www.hmrc.gov.uk/trusts/types/bare.htm also contains information.

You might also consider investing in stock market based investments for each child, again as bare trustee. You might consider an investment trust based plan or funds.
http://www.guardian.co.uk/money/2010/may/29/invest-for-children-child-trust-funds might be of interest. Remember that you can also invest in this way outside the CTF if you are using the CTF allowance in another way.

Hargreaves Lansdown permit Trustee investments for children - remember that if you choose to invest in funds that pay interest rather than dividends then you will need to reclaim the tax on your child's behalf.

baronsdale

confused .com

xylophone

Does each child have a CTF and if so in what is it invested? Have you added to them this year?

baronsdale

yes both have a ctf but with only the £250 that they both started with i dont want to put it in there as they can access it as soon as they reach 16 or 18 i want to give it to them when they are deemed responsible enough to use it wisely

xylophone

As far as I can see, your father has made an unconditional gift to the children and the money is theirs absolutely? If invested in a bare trust for them then the money does,as far as I know, become theirs at 18.
Any other arrangement is more complex from a tax viewpoint. I suppose you could invest each child's money in a 5 year bond ( with no early access )shortly before the age of 16 - this would hold off the time of receipt to age 20/21. However see http://www.hmrc.gov.uk/tdsi/children.htm re R85.

You still need to decide what to do with the money before that point.