Secret saving for children

notanewuser

psychic_teabag wrote: »

Halifax seem to have a kid's regular saver offering 6%, on at least £10 per month, if that's any use. Not investments, but seems a pretty good rate.

Do you have your own S&S ISA ? Suppose you put £40 per month for yourself + £10 for the child, then at any time, 1/5 of the value of the pot is the child's.

It wouldn't be for means-tested benefit purposes. Any savings in your own name and any in a child's name that you have access to are classed as yours.

psychic_teabag

Okay, I should have said "consider 1/5 of the pot to be the child's". OP is already planning to put the savings in their own name.

notanewuser

psychic_teabag wrote: »

Okay, I should have said "consider 1/5 of the pot to be the child's". OP is already planning to put the savings in their own name.

The OP needs to know the potential pitfalls of that.

xylophone

Have the parents opened a JISA for the child? You could just give up the "secret" idea and just contribute monthly to that? https://www.gov.uk/junior-individual-savings-accounts/overview

Lagoon

Prothet_of_Doom wrote: »

Why would you not tell the parents ?

It might take some financial pressure off them. Or they might agree to match what you put it, or they might overpay thier mortgage instead of paying into a savings account for the kids, or .....

I was the parent, who was surprised when granny, gave his son enough money for his university fees, and struggled to understand why they didn't tell me. Had I known I might have prioritised our financial arrangements differently. They might have had better holidays. LOL

Surely that's an argument for not telling the parents? If I were saving money for someone else's child, I don't think I'd tell them either. I'm saving that money as an extra boost for the child, not so that the parents can change their lifestyle knowing that my money would be coming their way.

Be_Happy

You can invest from £10 a month in the M&G Savings Plan, choosing from a selection of M&G Funds. I've been saving for my Grandson in the Index Tracker Fund. Plan is designated with my name and his initials, but remains under my control until such time as I choose to hand it over to him.

I've specified in my will that the Account is for him.

nd123

Thanks for all your responses, there are some good ideas here and plenty for me to think about.

notanewuser wrote: »

The OP needs to know the potential pitfalls of that.

Thanks for pointing out - will bear it in mind.

psychic_teabag wrote: »

Do you have your own S&S ISA ? Suppose you put £40 per month for yourself + £10 for the child, then at any time, 1/5 of the value of the pot is the child's.

That might be a good idea - would encourage me to use my own savings better too (naturally as part of a balanced and risk-aware "portfolio"). It might get a little complicated if second and third nieces and nephews come along, but I guess that's future me's problem.

Be_Happy wrote: »

You can invest from £10 a month in the M&G Savings Plan, choosing from a selection of M&G Funds. I've been saving for my Grandson in the Index Tracker Fund. Plan is designated with my name and his initials, but remains under my control until such time as I choose to hand it over to him.

I've specified in my will that the Account if for him.

Thanks - that sounds exactly what I'm looking for. Hadn't heard of them before but looking at their literature they seem like a very reasonable option.

N1AK

Prothet_of_Doom wrote: »

Why would you not tell the parents ?

It might take some financial pressure off them. Or they might agree to match what you put it, or they might overpay thier mortgage instead of paying into a savings account for the kids, or .....

I was the parent, who was surprised when granny, gave his son enough money for his university fees, and struggled to understand why they didn't tell me. Had I known I might have prioritised our financial arrangements differently. They might have had better holidays. LOL

For a number of reasons:

• They may not wish to publically commit to a £3,000 gift this far in advance
• They may decide to bring forward or delay payment and not wish to have to explain why
• They may not want the family to plan around the money

Taking an example from your list. If I was saving to give a gift to a niece then I wouldn't want the parents to stop saving an equivalent amount for the kid and pay off their mortgage instead. If I wanted to pay off their mortgage I'd give them £10pm towards it

N1AK

nd123 wrote: »

My wife and I gained our first niece a few months back, and have decided we would like to save a little each month for her future.

We can only afford to put aside £10 per month, but over 18 years we're hoping this will accumulate to a reasonable sum for her. The catch is that we don't want to tell her parents that we are doing this so presumably can't invest in anything in her name. So for all intents and purposes I want to save £10 a month for 18 years in my own name.

Given the investment term involved I would ideally like to invest in an index-tracking fund or similar, but can't find anyone that offers plans from £10 per month.

Does anyone have any suggestions for the best way to achieve a decent long-term return on such a modest monthly saving?

Many thanks in advance...

It's completely up to you of course and having a saving pot for a specific person is the normal way to do this, but... personally I would be inclined to simply increase the amount I am saving and budget to need the money in 18 years.

That avoids the hassle of setting up monthly payments etc. The obvious downside is that it means you have to remember that you have to find ~£4,000 in 18 years time! Some people, perfectly reasonably find keeping it separate far easier to manage.

One other advantage of keeping it merged is that you could, for example, decide that you want to give them at least £4,000 which you couldn't do if you chose a stock market investment with defined payments (basically you would be protecting the money you want to give them from the risk of poor stock market performance).

Factor in that inflation over 18 years means that money will likely be worth about 40% less by then: £4,000 then would have the buying power of £2,400 now.

Biggles

A bare trust is what you need, the investment will be in the ownership of the child, thus no tax implications for you. I can't see that the parents need to know, should that be the way you would like it.

Try http://www.fandc.com/uk/private-investors/savings-plans/savings-plans-range/childrens-investment-plan/