Investment for Child, need some help please!

BadgerFace_2

Hi,

I'm looking to put a little away every month for my little girls future and am really stuck as to what would be best to do with it!

I have a monthly budget of about £80.

I was thinking about putting half into a cash ISA type account and maybe half into a higher risk account, maybe stocks & shares etc.

I'm really new to all this, but want to do the best by her, so what would you do? Is it worth going to see a FA for this kind of small investment?

Kind thanks in advance for your help!

xylophone

http://www.hmrc.gov.uk/tdsi/children.htm

The "£!00 rule" does not apply to the CTF or JISA.
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/ISAsandJuniorISAs/DG_199672
Is your child eligible for the CTF or the JISA? (see link)

BadgerFace_2

Thanks for the link.

She is eligible for a JISA.

With regard to the £100 rule, I am a higher rate payer, but my wife doesn't have any income, could I use her tax free allowance for that?

bigadaj

Eighty quid is pretty low for stock Market investments, particularly if you only put half in.

webmasterpolo

Hi

Look at putting the whole £80pm into the JISA for your daughter using stocks and shares options if you are happy giving up access until she is 18 and then it's hers to do as she pleases.

If you'd rather control it consider keeping it in your wifes name for the tax rate. Perhaps a S+S ISA for her, if your daughter is young and the time frame long the S+S ISA may still make sense as your wife would still be liable for CGT if not income tax.

Obviously you can also have a S+S ISA yourself.

Most S+S options require £50pm min, so perhaps 30 cash 50 shares if you that fits your plans.

As always there are a thousand options, and no one to advise you as no IFA would touch this value. If you have your own investments consider using an IFA for them and tag this childs account into the deal.

-Web

Totton

I'd put the slot into a Vanguard Life Strategy fund, a long time span suggests equities are a better option than savings but you could split it if you were being cautious.

Sadly the Vanguard funds can be difficult to source or comparatively expensive but I would bite the bullet and set-up a monthly drip feed via someone like Hargreaves Lansdown. Their £2 monthly fee means initially it works out expensive so there may be a better place to purchase the fund, I just tend to look at HL as I am happy with their level of service to me.

Other than the Vanguard funds there are lots of trackers such as the HSBC range, however I think that the relatively small sum involved does not warrant more than one fund purchase and for that I would go for something like the Life Strategy fund or similar such as the Fidelity Target funds where you select a date in the future, e.g.. Fidelity Target 2030.

HTH,
Mickey

xylophone

http://www.hl.co.uk/investment-services/junior-isa?utm_source=twitter&utm_medium=social&utm_content=jisa-image&utm_campaign=TJISA&theSource=TJISA&Override=1
might be of interest to you. The £80 a month is quite acceptable under the HL arrangement.

You might consider investing your £80 a month into something relatively conservative like the Invesco Perpetual Distribution Fund - ask about purchasing the GROSS ACC units if in a JISA or possibly in an equity income fund, uk or global?

Or you might consider an investment trust something like this perhaps?http://www.liontrust.co.uk/Products/IndividualSavingsAccountISA/JuniorIndividualSavingsAccountJISA.aspx

Although your wife is currently a non- taxpayer she might not always be, so in your position I wouldn't save for your child through her.

If you would be uneasy about handing control of the JISA to the child at 18, your wife could always consider using her own ISA allowance, regard it as earmarked for your child's future and hand over money/gifts at a time of your choosing?

BadgerFace_2

OK, so I'm thinking vanguard life strategy 80 @ £100 month. What are your thoughts on this?

I would ideally like to find lower than the HL £2 platform fee, as this seems a little steep. Is there any other options to HL, I can't really find any.

Kind thanks

xylophone

OK, so I'm thinking vanguard life strategy 80 @ £100 month. What are your thoughts on this?

I have never used Vanguard but the funds seem to be a popular choice.
http://monevator.com/hargreaves-lansdown-vanguard-funds/

I would ideally like to find lower than the HL £2 platform fee, as this seems a little steep. Is there any other options to HL, I can't really find any.

Neither can I but others may know better?

Totton

Unfortunately the Vanguard funds do not have a long history in the UK so we are unable to fully judge but the company has done very well over in the US and isn't a dodgy business afaik.

The £2 a month fee at HL appears dear but gets cheaper as you add to your holding :-) At various times you will find cheaper places to purchase the funds but be aware that the majority of providers will be changing or have changed their charges ready for RDR. The point is apparently that the fees that we pay become more transparent, so you pay (for example) HL a monthly fee rather than the fund provider paying it behind the scenes and charging you a higher fee - either way it is we that pay and as with many of these things we end up paying more.

I used to prefer to purchase direct from the providers but that is discouraged these days with higher fees but also by the ease with which you can change/move your holdings around on the fund supermarket platforms, things are very convenient on the likes of HL etc.

Best of luck with it,
Mickey

BadgerFace_2

Thanks, I have gone with HL and have to agree it's a very easy platform to use.

Although the fee is high on the amount of money invested at this stage, because it is a monthly contribution, it works out alright compared to per deal companies.

Thanks for the help