Best Lump sum saving for children

Gary2Seven

My mother recently passed away and she has left £10k to each of my children, to be given to them only when they are 18 years old.

They are currently 10 and 14, so I need to put it away safe and earning for them for a few years.

What are my best options?

xylophone

For the 14 year old, provided you open a cash isa of your own with the Halifax, your could consider opening the Child Isa (JISA) which pays 6%. http://www.halifax.co.uk/isas/ That would take care of £3720 - the balance could be held in bare trust in the Virgin child account and transferred into JISA in the tax years 2014-15 and 2015-16. https://www.gov.uk/junior-individual-savings-accounts/overviewhttp://bank.virginmoney.com/savings/learn/childrens-accounts/

The ten year old has a CTF presumably which you might want to use, using the Virgin account for the balance.

You might feel however that as interest rates (with the exception of the Halifax JISA) are below inflation, you would prefer to look at stocks and shares - this option is available inside or outside CTF/ISA.

It is possible to open bare trust accounts for children with Hargreaves Lansdown (https://www.hl.co.uk/free-guides/investing-for-children) - you could consider equity income or distribution or bond funds perhaps. If the child is a non-taxpayer (or 10% taxpayer), as Trustee you would need to reclaim tax paid on any interest paying fund.
http://www.hmrc.gov.uk/individuals/savings-income.htm

You might also consider investing in an investment trust in bare trust - example here http://www.sit.co.uk/products/investing_for_children/features/how_to/

Gary2Seven

Thanks xylophone, I have applied for a copy of the Hargreaves Lansdown guide and will look at The Halifax as I already have accounts with them.

Someone has told me there is an issue with JISA and when children turn 16 they have to be closed and a new "adult" ISA opened, do you know if this is this true?

xylophone

Someone has told me there is an issue with JISA and when children turn 16 they have to be closed and a new "adult" ISA opened, do you know if this is this true?

No - it is not true. The JISA remains a JISA (and no money can be taken out of it) until the child is 18.

What is true is that a child of 16 or 17 can open his own JISA and that a child of 16 can replace the parent as registered contact.

Read this https://www.gov.uk/junior-individual-savings-accounts/overview carefully.

atush

I do think, for the 10 yr old at least, you should look at investing in equities over cash.

weemumpirie

Have the same issue too, although living in Scotland have been excluded from all tlhe products with a reasonable interest rate as all require a branch to open the product and they are all English banks/building societies.Instead of 6%, 3% seems to be the best available. Very frustrating, Scottish financial institutions still running country to its knees

xylophone

http://www.halifax.co.uk/isas/
https://apply.halifax-online.co.uk/personal/a/apply_savings/juniorisabelow16
Jisa can be opened on line now?

jimjames

weemumpirie wrote: »

Very frustrating, Scottish financial institutions still running country to its knees

Except one of the best providers of Investment Trust Children's savings schemes is Aberdeen!