Best Place to save regularly, long-term?

AlanJ1977

Hi,
With a baby on the way I'm after some advice about where best to invest a regular sum per month for say 18 years (to help pay for any future Uni fees etc!). Something that's not too risky, with a guaranteed return. Friendly Societies/Endownments/Bonds?

Apologies if there's an artice on the website about this, but I've looked and haven't found one yet.

Thanks - I'd appreaciate any tips.

gt94sss2

Have a look at the Investing For Children board on the Motley Fool for some ideas.

Regards
Sunil

jamesd

18 years is a classic long-term investment. You really should be looking at using funds of various sorts instead of things with guaranteed returns. Something like a UK equity income fund is fairly low risk and should do considerably better than savings accounts.

dunstonh

Something that's not too risky, with a guaranteed return. Friendly Societies/Endownments/Bonds?

Something tht isnt too risky with a guaranteed return doesnt exist.

Cash within a CTF will be lucky to retain it's real value (after inflation). If you stick it in cash then you will be giving the child the spending power of £250 when they are 18.

The timescale and amount mean some risk should be taken. That doesnt mean jumping in at the deep end and going to the opposite extreme. You can pick some lower to medium risk investments and take a measured risk.

Putting it in cash for 18 years is a waste and the Govt should be slapped for allowing that option to exist.

Milarky

dunstonh wrote: »

Putting it in cash for 18 years is a waste and the Govt should be slapped for allowing that option to exist.

A query to dunstonh, though. Can an existing cash CTF be transferred to an investment CTF and vice/versa under the rules? (I assume that full cross transferability is a feature of CTFs but haven't seen this mentioned anywhere)

Well I think that the government messed up for a different reason: Only children born after 1 September 2002 can have CTFs. Eventually that will include all children of course. However, they could have cut the free-money out altogether (or just paid it to those born after the cutoff date) but still allowed access to these products for 'older' children. Had Gordon Brown's first child survived, she would not have had access to a CTF in the future - whilst his sons do. And, initially, under 18s were not eligible for ISAs. It's now 16 for cash ISAs, but that scarcely bridges the gap. Children born between 1991 and 2002 at present have no access to tax privileged cash accounts (and 1989 and 2002 for investment accounts - although they can have a stakeholder pension!) CTFs can go into ISAs too - which simply proves (to my mind) that children should be allowed to have an ISA (possibly with the lower CTF limits until 16). In other words, when CTFs were foisted on everyone someone in the Treasury should have put foward the principle of a level field for savings - but they either didn't or weren't taken notice of.

That begs the question whether dunstonh thinks an ISA/CTF wrapper (and you can take money out an ISA but not out of a CTF!) is a good wrapper or an poor one - notwithstanding what you put in it.

baby_boomer

dunstonh wrote: »

Putting it in cash for 18 years is a waste and the Govt should be slapped for allowing that option to exist.

The Treasury quite rightly did not want to give parents any possible grounds for future litigation. In the event of a stock market crash lasting a decade or more, we taxpayers would have enough problems without adding compensation payments to millions of children.

Parents who couldn't make their minds up had the vouchers put into the stock market by default.

What else could the government have done? I don't see dunstonh's point at all. We are a free country, not a Stalinist state, even under Gordon Brown. Some free citizens don't necessarily see the stock market as a one way ticket. Other free citizens might choose to take advantage of tax free cash and invest money in the stock market by different vehicles which have lower charges than many CTFs.

I'm sure, as an IFA, that he wouldn't want to encourage New Labour into such Stalinist tendences.