Investing for my grandson

phil-maskell

I have £5,000 that I wish to invest for my new grandson, anyone with some good advice on where to put it and what ways I can ensure that it is not payable to him until he is 21?
Thanks

Archi_Bald

How old is he?

typistretired

I assume new is newborn?

Halifax have the Young Saver paying 3.00% gross/AER on balances from £1 up to £20,000
0.50% gross/AER on anything over £20,000

Don't forget to complete a HMRC R85 form. I believe this account only goes up to 15 years.

innovate

If the timeframe is more than 10 years, an investment rather than a savings account seems to be called for. You could probably set up some sort of a trust that won't pay before your grandson is 21.

xylophone

A bare trust would require that your grandson had access at 18, (16 in Scotland).

Any other type of trust has complex tax rules http://www.hmrc.gov.uk/trusts/types/discretionary-accum.htm

It might be possible for a bare trust to be set up and for the Trustee(s) to move the money into a five/three year fixed rate bond before the child became entitled to access- the account would still come under his control but not be available to him until the desired time.

If the money is saved in bare trust in a deposit account of some kind, and the child is a non tax payer, an R85 can be completed on his behalf - note that after the age of 16, if the account is still held in bare trust, this must be rescinded and any tax owed reclaimed on the child's behalf.

It would be possible to hold an OEIC or investment trust in bare trust- if the fund paid interest rather than dividends, any overpaid tax would need to be reclaimed. http://www.hmrc.gov.uk/individuals/savings-income.htm (The tax allowance cited in the sheet is out of date.)
https://www.hl.co.uk/free-guides/investing-for-children This might be worth a look.


If the parents are not planning to fill a JISA, it might be easier all round for the grandparents to fill it up to the allowance for the first year and add the balance (which could be held in an account in bare trust until the appropriate date) in the second. However, the money becomes available to the child at age 18.
https://www.gov.uk/junior-individual-savings-accounts/overview

Halifax are currently offering the best JISA rate provided one of the parents holds an ISA with them. http://www.halifax.co.uk/isas/

WoodM

You have to think whether you want to invest on his behalf or save on his behalf. If you are choosing to invest, best way is probably to think about funds and the level of risk you want to take (e.g. emerging markets vs income funds etc).

Might be best to ask your local bank first if you want to save rather than invest.

atush

Equities, in trust if yiou want 21, as 18 is the law in england.

I held what I invested in an investment trust savings plan.

Gave the money over for university spending, and gave the balance at 22.

Money was mine beneficially, as they were only designated. If you do this you have control on the date they get it, but the money remains yours for all other purposes (from tax to death to divorce to means tested bennies, to court judgements).

If you dont' want this to be the case, you need to think abt giving control at 18.

innovate

WoodM wrote: »

Might be best to ask your local bank first if you want to save rather than invest.

Oh no!! Don't. Just don't. Better understand fully what atush is suggesting because that doesn't restrict you to the limited offers your bank could make.

Of course, for a laugh, you could actually ask your bank for suggestions. Please post them here first so people can comment on them before you make up your mind.

bigadaj

WoodM wrote: »

You have to think whether you want to invest on his behalf or save on his behalf. If you are choosing to invest, best way is probably to think about funds and the level of risk you want to take (e.g. emerging markets vs income funds etc).

Might be best to ask your local bank first if you want to save rather than invest.

It's amazing that people still have this idea about banks.

An analogy is walking into your local ford dealer and asking what car is best and then just buying that without shopping around and haggling.

In fact it's far worse, as if you buy a new car now its generally decent, the banking analogy would be too charge you a premium for a ten yard old model.

Totton

For me atush has the best suggestion so far. Keep things simple and opt for an Investment Trust, use a savings plan if you are thinking of adding regular amounts to it as that will cut down on the dealing costs.

I'd take a look at IT's such as Law Debenture (LWDB), Finsbury Growth and Income (FGT), Scottish Mortgage (SMT) etc, or if adventurous there are plenty of other options. The key thing is the amount of time you have, if thinking 20 years then equities seem the best place for the case imho.

Good luck!
Mickey

xylophone

Just be certain that you know the difference between "bare trust" and mere designation.
http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/