Saving for my daughter

SG_28

Hi. We have recently had a death in our family and my daughter has been left a lump sum of money I would like to be held somewhere for her until when she is older. I already have a child trust fund for her which I put money into each month, shall I just put it in there even though it's a stakeholder account? I would have to put the money in, in stages and my owe dd would stop as the thereshold is only £3600 from birthday to birthday...

I did want to open a junior isa but heard you can have one if you have a ctf.

Any ideas please?

SG_28

Also could someone advise me if I am going the right thing with her stakeholder ctf, it's with Lloyds TSB. Should I transfer it somewhere less risky maybe...

martinman3

As your daughter already has a Stakeholder CTF you must be happy to invest in Stock & Shares.

It is well known that annual management fees on Investment Trusts can be lower than those charged on CTFs. In addition, as CTFs can no longer be opened there is no need for them to be competitive.

Products such as
F&C Children's Investment Plan
http://www.fandc.com/new/it/Default.aspx?id=78401
Baillie Gifford Children's Savings Plan
http://www.bailliegifford.com/pages/UKPersonalInvestors/Children/InvestingforChildren.aspx
Stockplan
http://www.sit.co.uk/products/investing_for_children/

allow investment trusts to be purchased with minimum initial fees, no annual fee for the plan itself, low minimum purchase/top-ups (£100-£250) or monthly direct debits (£25). The list of investment trusts which can be invested in differ for each and are mentioned on MSE from time to time.

There are others from Alliance Trust, Jump(Witan), Aberdeen and Fidelity which, in my opinion, are not such good value as they all have disadvantages such has higher minimum investment/initial fee/withdrawal fee etc which have a greater impact on smaller lump sums.

A point that is worth mentioning is that if the investment is coming from a legacy you should keep copies of the documentation from the executor to prove that the money did not come from you. This is because of the HMRC £100 rule for gifts from parents.

xylophone

In your position I would keep the CTF for deposits from you and your husband - saves concerns with the hundred pound rule.
http://www.hmrc.gov.uk/tdsi/children.htm
As your child is under 18, and so cannot give valid receipt for the money, you/your husband will hold it as her trustees in a bare trust until she is 18. Keep careful records of the source of the funds and how it is invested.

You can invest in a variety of cash accounts - you do not have to confine yourself to children's accounts - you simply need to check with the account provider that a "re" or Trustee account is acceptable.
If your child is not a taxpayer, then you will complete R85 but see the link as to what needs to happen between the child's 16th and 18th birthdays.

You can invest in investment trusts, OEICS,etc on behalf of the child - should any such investment pay interest rather than dividends then you will need to reclaim tax on the child's behalf - if this should be the case then it is useful to have an instant access " re" account into which such sums could be paid and also any dividends should you choose to invest in individual shares.
https://www.hl.co.uk/free-guides/investing-for-children2 might be of interest
http://www.thisismoney.co.uk/money/saving/article-1604866/Investment-trusts-for-children.html - a bit old but might be useful.