Best place to put £22 a month for 25 years?

merlingrey

xylophone wrote: »

You can of course hold this money in your own name and give it to the nieces and nephews when they reach the age of 25 but be aware that this money remains in your estate, is taxed as yours and in the event that you needed means tested benefits, would be taken in account even though you regard it as "earmarked" for your relatives.

Interest rates on any type of deposit are very poor at present, not matching even CPI (let alone RPI) inflation.

You might consider this type of account in the name of each child individually http://bank.virginmoney.com/savings/find/results/childrens-accounts/ for each child held in bare trust, but be aware that the beneficiaries can call for access and control at 18 (16 in Scotland).

Again, interest rate does not even match CPI let alone RPI inflation.

Assuming that you do wish to hold the funds as your own (and are aware of the drawbacks), you might consider a designated account in an IT, contributing £25 a month and selling units as appropriate to fund the gifts. See here for example and explanation of designated as opposed to bare trust http://www.sit.co.uk/products/investing_for_children/features/how_to/
You could include a clause in your will that in the event of your death, the "earmarked" deposit account or the investment as appropriate, was to be shared equally between the children

Well to get an idea of what future prices will be :

http://www.newsroom.hsbc.co.uk/press/release/22_years_since_mortgages_peake


Given circumstances today i'll prognosticate 25 years into the future:

Loaf of bread £6.75 (i'd expect food prices to exceed any CPI type rate by a factor of 2x)

Average wages £56,000

Average house price £200,000 (due to corrections, recessions back to a 3-4 x yearly wage multiplier)

Price of gold: £2500

FTSE 100 index: 25,000

Barrel of oil : $250

Packet of 20 cigs: £52.50 (assuming they are not banned)

Pint of beer: £18.50

1st class postage stamp:£2

Weekly average shop for a family of 2 adults 2 children: £650

Cost of 1ltr of fuel: £25 (expect to be taxed higher to reduce use)

All the above can be viewed as best case/normal

opinions4u

bigfreddiel wrote: »

i'd start a pension for each of them and let hmg add their 20%

fj

While I would never look to undermine the value of a pension, the amount involved here is tiny.

What's best - a fiver a month when 70 or a £1,500 lump sum when in need of a car, house deposit etc at a younger age?

There is also a value in the the joy of giving. That's removed if you've already croaked yourself.

concrete_kid

@Merlingrey, interesting post.

I have considered the value of £1500 in 25 years. I understand that at normal inflation rates it would be the equivalent to £500-600. However if I don't save for it they will be getting what ever is left from my salary, which will definitely not be impressive.

If I had received £500 for one of my birthdays I'd have been very pleased.

@Marathonic
I may consider joining it on to my own savings if it makes financial sense to so. The reasoning behind keeping it separate is simplicity and safety (from me needing to dip into it in the future).

I think it's rather sad there isn't somewhere simple to put money that would at least maintain it's value. You can see why people don't save!

xylophone

may consider joining it on to my own savings if it makes financial sense to so. The reasoning behind keeping it separate is simplicity and safety (from me needing to dip into it in the future).

Go with the designated account idea - standing order for £25 a month and clause in your will?

atush

I think it's rather sad there isn't somewhere simple to put money that would at least maintain it's value. You can see why people don't save!

There is, and we pointed out where- the investment trust savings plan idea. A phone call, a form and a DD to fill out and 10 years later, thousands in an acct.

easy peasy lemon sqeezy

concrete_kid

@atush
I think I must have missed that post. I think this looks like the best option to start off with.

I wanted something that I could open and forget about. But I suppose to get the best returns you need to keep an eye on the market and move funds as necessary.