Received small lump-sum for kid...does it affect my benefits?

sulkisu

Also be aware that if you put it into a Junior ISA, she gets the money when she turns 18 and can do whatever she wants with it.

alicewilliams

Thanks sulkisu.

They are not very high rates, even with a junior ISA, so i'm thinking my best best would be to put them in a share-dealing account, but for the medium to long term.

I'm going to post this question on the investments forum too, but could someone please tell me if there is a share-dealing account, where they don't charge you for inactivity?

sammyjammy

Surely it's not appropriate to risk your child's money by dealing in shares?

alicewilliams

I'm going for long-term sammy. I believe you can always put a limit on the amount shares can drop and this automatically triggers the software to sell, before you lose all shares. I plan to put this trigger in place of say 10-15%.

Also I plan to invest it across different shares to further reduce the risk and will hopefully be adding my own money to the pot. If child trust fund allowed you to invest in shares, then why is that not right?

Voyager2002

alicewilliams wrote: »

Thanks voyager2002. Don't quote me on this, but I think I am not allowed to spend money on her for things like school trips etc, without seeking court approval each time. As far as any trips go, I'd be happy to pay for them out of my own pocket.

By tutor, you mean a home-tutor, to help her with her grades? She is already one of the highest achievers at school, although it is a good idea, but the problem I have is then to find a trustworthy tutor.

If a tutor is not possible, then I want to put this money to use on her higher education ambitions.

I suggest you check up on the rules about spending that money on her over the next few years, because it is an important issue.

Since you live on benefits your income, and options for supporting your daughter, are very limited (I have been there as well). The money that is for her benefit is likely to make more difference to her life if spent over the next few years, than spent later on. Saving it for her to go to university is not a good idea: the system of loans and grants is still fairly generous, particularly so when the parent is poor (I have two children at university and I am on JSA, and they seem fairly well off financially). And do remember that the cost of being a student is actually LESS at the top universities (above all Oxford and Cambridge) than at most second-tier ones, so money spent on something that gets her in at the top would be the best possible investment.

And I don't think you should be considering a share-dealing account. The problem is that when you buy and sell shares there is commission, so with a small sum you could not spread yourself across a lot of different companies. Any company that you choose might fail: if you have shares in twenty others, most of which do well, that would not matter, but if you only have shares in two or three companies then that would be a disaster. And the commissions mean that it is not sensible to invest less than a couple of thousand in any particular share. While you could get round this problem using a Mutual Fund or an Investment Trust, you would still be facing a level of risk that I would regard as unacceptable along with the likelihood of very limited returns.

My advice is to invest in your daughter: in her education; in things like intensive language courses in the country where the language is spoken (my son had a fantastic time learning Arabic in Egypt); and in things that make her teenage years just that little bit happier than they would be otherwise.

alicewilliams

Thanks very much Voyager2002. I understand what your saying and I think your right. I shouldn't risk the money is share-dealing accounts. I received a Parental Discharge Indemnity Form, which releases the company from any obligations, but gives me the authority to manage the money responsibly for the child.

I have given it a lot of thought and I'm willing to go down the route of spending the money now on bettering her education now, but I don't have a clue as to which tutor to get for example for her after-school work etc. Am i allowed to spend it for example on computer equipment that she needs? Or if I wanted say a Maths or Science teacher for home, how can I find a good teacher for my area? How could I trust them to know they will do the best for my child?

BurnleyBob

I don't want to sound rude but have you given any thought to consult her about how you intend to spend or invest her money?

KiKi

Hi Alice

Be clear on the different. Investing means putting money into shares / investments which can go up and down, and you could lose her money this way. I have a friend this happened to - she was devastated. For such a small amount of money (in investment terms), I don't think this is worth your while OR your risk.

Saving protects that initial capital of £1900, even if interest rates are lower.

With such a small amount, I'd put it in the highest paying savings account or ISA or bond and move it to another account when the interest rate drops. That way you can still access it if you need it (unless the account T&Cs prevent you from doing do) for her in the meantime.

Current rates are about 2% for a year (make sure you sign a form when opening the account so she doesn't pay tax on the interest), or 3% for longer fixes. I personally wouldn't fix for more than 3 years at this point in time. As someone else posted, the link to the highest paying accounts is here: http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#fixed

Those suggesting you get stuff for her now are right - but ONLY if she needs it. You don't need to get her a tutor or computer equipment if she doesn't need it, that's just a waste. Put it in a savings account, and see how things go; if something comes up, or she's struggling at school, reconsider then. But at 12 if she's doing okay at school I wouldn't be paying for a tutor. Much better to use the money at important times (such as GCSEs or A-levels) or when she needs something.

Equally, it doesn't have to be for bettering her education, does it? There are other important things like experiences, such as dance lessons or travel. Until you really know, and until you really are sure that she will benefit from something, put the money in a savings account so it's protected.

HTH
KiKi

northerntwo1

My children have little rock accounts and get 3% interest. The Halifax young saver has 3 % too.
I'd also look possibly at £500 in the Royal Mail as you can invest for children but this is risky.

fabforty

alicewilliams wrote: »

Thanks very much Voyager2002. I understand what your saying and I think your right. I shouldn't risk the money is share-dealing accounts. I received a Parental Discharge Indemnity Form, which releases the company from any obligations, but gives me the authority to manage the money responsibly for the child.

I have given it a lot of thought and I'm willing to go down the route of spending the money now on bettering her education now, but I don't have a clue as to which tutor to get for example for her after-school work etc. Am i allowed to spend it for example on computer equipment that she needs? Or if I wanted say a Maths or Science teacher for home, how can I find a good teacher for my area? How could I trust them to know they will do the best for my child?

Why not just slow down, you seem to be in a hurry to spend it . It's a windfall, i.e. money that you were not expecting to have, so best to put it away until something extraordinary comes along (assuming that it does) that needs paying for - something that you, as parents, would not normally be expected to pay for, or simply could not afford.

For example, you are talking about getting a tutor for her. Does she actually need one? If she is struggling in certain areas, are there cheaper alternatives, for example have addressed issues with her school. Were you thinking of getting her a tutor anyway? If the answer is 'no', then you shouldn't be doing it now just because there is money to pay for it. Likewise, if you were planning to get a computer anyway, I don't think that her money should be used for that.

Depending on her age, she should probably have some say in how it is spent.