Pension for a baby

Murphy_The_Cat

all aboard for a blatant bump.

any other helpers/takers ?

theboyjb

I bought a Scottish Widows pension for my little boy via BestInvest. That way you get a larger range of funds to invest in than if you buy direct from SW.

http://www.bestinvest.co.uk/children/stakeholder.htm

http://www.bestinvest.co.uk/pensions/recommend.htm

HTH

cheerfulcat

Murphy_The_Cat wrote:

1 in a UK equities 'aggressive' fund, with a bias towards blue chip, banking and petrochemical companies

You either have an aggressive fund or you have one with blue chips...to be honest, unless you are prepared to put in a fair amount of work I think that you would be better off using one of the large, established investment trusts of the " portfolio in a share " variety. Have a look at the Global Growth sector here. Alliance Trust offer a cheap pension wrapper.

ReportInvestor

There are arguments for and against a pension at age 0.

IMHO the main argument for is that you could achieve 60+ years of compound growth on a stock market investment which has incredible potential.

The way our childrens' lives will work in future may mean that even 10 years compound growth is unusual e.g.

Pay off £30K student debt by 28.
Save for house deposit by 34.
Pay off mortgage & raise family, including university fees, to 59.
Save for pension for 10 years to 69.

£3K compounded growth over 10 years @ 8% = £6K
£3K compounded growth over 60 years @ 8% = £304K

In fact, why take unnecessary risk with this money when your baby is on to such a winner given that investment time scale?

Murphy_The_Cat

Thank you for the plethora of advice.

Thebobjb, I'll check them out, they sound very informative.

Cheerfulcat, I think thats more to do with me not knowing the proper way to desribe something ! What I meant was a fund that predominantly dropped money into the likes of BP, ICI, Shell etc as well as the big boy financial institutions.

ReportInvestor, I love compound interest and what it does to long term investments.
A £50 monthly pension contribution (£64.10 when the tax goes back on) would build up a fund of just over £1 million in 60 years, or neraly £1.5 million in 65 years at the very modest growth rate of 8%. I am fancying an aggressive approach as I would like to build up some good foundations to the fund in its earliest years.
I'm also putting money aside in a 'regular' fund with a view to it being an 18/21 year investment - which again adds up to a nice amount with the wonders of compound interest. This is in my name (& one in Mrs Cats name) but we have earmarked/assigned them seperately for the children.

I have no intention whatsoever of ever telling my children that we have done this for them, they will only find this out when we decide to let them know (I expect when they are looking to start at Uni, buy their first house, start up in business etc, etc).

I have no interset whatsoever in investing any extra into the CTF.

They also have savings accounts and we go to the building society every week to drop their pocket money savings cash in. You're never to young to start saving (IMO) !

cheerfulcat

Murphy_The_Cat, what I was trying tactfully to do was point out that if you don't even know what sort of shares go to make up an aggressive fund, you need to either learn a lot more or hand the investment decisions to someone more qualified ( that's where the investment trust comes in ).

Bear in mind too that while compounding is indeed a wondrous thing, inflation will have a significant effect over such a long period - your million in today's money will only be worth ~£86,000 in 60 years' time...having said all that, I think that you are doing a very nice thing and hope it goes well for you.

Murphy_The_Cat

cheerfulcat wrote:

Murphy_The_Cat, what I was trying tactfully to do was point out that if you don't even know what sort of shares go to make up an aggressive fund, you need to either learn a lot more or hand the investment decisions to someone more qualified ( that's where the investment trust comes in ).

Bear in mind too that while compounding is indeed a wondrous thing, inflation will have a significant effect over such a long period - your million in today's money will only be worth ~£86,000 in 60 years' time...having said all that, I think that you are doing a very nice thing and hope it goes well for you.

Cheerfulcat, thanks for the tact - I don't post in the pension section very often and its very kind of you (and others) to help me in my descision making process.
I am a great believer that a 'little knowledge is a dangerous thing' which is why I'm taking very much a 'asking for help approach'.

I'll put a bit more flesh on the bones for you now. I'm not a complete financial basketcase, but I'm a looooooong way short of being able to describe myself as being deeply knowledgeable when it comes to pensions. To date, I've set up 3 pensions, 1 for me, 1 for Mrs Cat and one for MTK - well, more to the point, I've gone to an IFA, who has given me advice and who has then set up the pensions, and I fund them every month.
The 'thing' with dealing with an IFA is that (there have been 4 so far due to staff turnover and company takeover) is that I don't feel that they are really advising me enough, and that to much of the input is coming from me.
A good example is this thread, I have had more comtribution and EXPLANATION OF WHY from people on here than I have had from any of the IFA's.
Going back to the OP, I was looking for ideas/thoughts/suggestions as to what type of funds (but no specific fund names as that would be unreasonable to ask, and against the site rules) would be a good mix to go for , for a babys pension, with a view to a 60/65 year investment.

I very much appreciate what you are saying about the power of inflation (as well as the power of compund interest), but I've made my projection on the assumption of a £50 contribution (or £64.10 when the tax gets added back on) for the duration of the pension - if I (or later my daughter) would start to increase the contribution by mabye index linking it, the fund would then end up with a much larger pot (and the ogre of the upper pension value limit would loom very large), but what a lovely problem to have !

& finally, I think that it is a lovely thing as well. I grew up in a house where there was not a spare £ for anything, but my parnets made up for it in other ways. I have been moderately successful in my life and I'm doing what I know my parents would have like d to have done for me, but never had the opportunity to.

:beer:

Murphy_The_Cat

Paul_Varjak wrote:

In the first instance I would make sure that any government contribution is put into the CTF. I would not add my own money to the CTF. Come 18, when your 'child' gets this money you will be able to judge just how well they can manage money.
I agree wholeheartedly and I've done this

I would not invest in a pension either. Who knows what other financial obstacles the government can place in front of your child before they reach maturity. I would invest in equity/property to help your child in their adult years to repay student loans & buying a house and anything else, as yet unforseen.
Hmmm, I have enough spare money every month that I could build up a very tidy pension pot, as well as a very tidy university pot/house deposit pot for both of my children. However, my disposable income is a long way away from being enough to invest in an additional property. I am however overpaying my morgage like mad and in several yeras time, things may be different.

Also, you don't know what the future holds for you. Maybe you will become ill and unable to work; if the money is in a pension you cannot touch it, but if it is still in your name you can at least use it if required.
If I/we become ill, then you're absolutely right, we couldn't touch the childrens pension funds, but we would be able to stop contributing to them. Because it is such a long term investment, the amount going in every month isn't huge. As regards the other investments, these are in our names, but assigned to the children - so if it all went wrong we could access that.

If there is still surplus money to invest then, yes, go ahead and put money into a pension.
All of the money that is being invested is indeed 'surplus money'.

Thanks for your thoughts Paul :beer:

pavlovs_dog

went hunting through your sig to find this thread murph

someone posted a link to a very interesting article in this thread ... saw it and thought of you. them two very lucky kittens you have there :beer:

BTW, you posted a piccie of your newest cub yet for us all to coo over?

Murphy_The_Cat

pavlovs_dog wrote:

went hunting through your sig to find this thread murph

I'm not sure if that's a compliment or not, but I'll err on the good side and say thank you very much

& thanks for the links as well - from the Times article, it looks like plenty of other parents are doing the same as me as well. :j



p.s. no piccies as yet.