Investing for a child

Kate_Bentley

My son has recently been left a lump sum of money by his grandfather. (est £15k) I would obviously like to invest this wisely for him to achieve the best return but I really don't know where to start. He already has a CTF and is 8 yrs old.
Advice please.

xylophone

Unless the will has specified that he is to have the cash immediately or has set up any kind of formal trust arrangement, it would be normal for the parent (s) to hold the money for him in bare trust until he is 18 (16 in Scotland).

You could use any account that permits a holding in bare trust- remember that any R85 must be rescinded after the child turns 16 and any tax overpaid reclaimed by the parent on the child's behalf. Some information here http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/

If you would prefer to use a stockmarket based investment, an OEIC or Investment Trust can be held in bare trust example here http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

http://www.hl.co.uk/faqs/contact-us/can-i-invest-on-behalf-of-a-child might be worth a look.

If a stockmarket based investment pays interest any tax overpayment can be reclaimed on behalf of the child.

You should keep a record of the source of the funds.

robatwork

At 8 years old he has 10 years (at least) until claiming the money which is a long term investment.


As such you should really think about a stockmarket investment rather than chucking it in the bank at 2% interest (which will actually give him back less than 15k in real terms as inflation is above this).


Xylophone's link is good

atush

I agree, with your timescale I would invest the money. Probably in an investment trust (or several).

If you are leery of investing as a lump sum, split it and invest monthly over the next 1/2 years