Advice please! (investment ISAs for beginners)

petersprizes

Hi all,

I wonder whether anyone can help me with a question about investment ISAs.

I have two sons, currently 5 and 0. About a year ago I started saving for them to go to university (or whatever else they might want to do at 18). I started putting £40 a month (with a view to raising the amount when I could) into a cash ISA, and so now have just over £500. I've been keeping an eye on rates so I get the best return, however it is really bugging me that I'm not beating inflation.

Can anyone advise: should I use a managed fund ISA instead? Is a £500 start-up followed by £40 per month too little for a managed fund? (Can raise to £50 per month if that's the entry-level commitment required.) I don't mind the odd up and down along the way provided that I'm relatively confident it'll beat cash ISA rates by 2027 / 2032! I have been doing some research on the returns, however it's hard to get clear information on what they averagely return after fees over time.

(I know that Junior ISAs return more but don't like that idea as I don't want the money to be in their control at 18, and don't want to totally lock it away until then just in case the sky really falls in in the meantime.)

Thanks in advance for any help,

Peter

musashi10

Hi, I have been investigating funds recently and most require £50 minimum payment monthly.

Not all require a start up figure. The one I just did doesn't.

I can see what you mean about inflation, interest rates suck. I think they will go up at some stage but that could be some way off.

However, my only concern is that your children will go to university at a fixed date.

The economy seems to ususally sort itself out over time. But you have a specific time allocated for withdrawal. What if the economy is going in a downturn at this stage? Or another crisis?

You could alternatively invest it into a fund for the majority of the time, and then before they go to university withdraw it and stick it into a savings account to protect the money, and invest your monthly amounts you were paying into a cash isa

I guess after you have selected the fund you want you could calculate the financial impact of this and compare to just leaving it in a cash ISA over time etc.

jimjames

The amounts you are talking about are definitely not too small for managed funds or investment trusts.

We use F&C which is from £25pm and Aberdeen from £30pm

xylophone

You could make a regular investment into an investment trust - look at designated accounts. Some examples:-

http://www.bailliegifford.com/documentgateway.aspx?_id=A112736077F24F60869AECB10A65E28D&_z=z&download=go&disclaimer=ok
http://www.sit.co.uk/products/investing_for_children/features/how_to/

http://www.invtrusts.co.uk/aam.nsf/InvestmentTrusts/investchildren
http://www.invescoperpetual.co.uk/site/ip/pdf/brch-child-fnd.pdf

petersprizes

Thanks everyone: any idea how I'd go about choosing a fund? Is it just a case of looking at past performance and taking the website's suggestions as to risk appetite?

bugbyte_2

Yes, basically.

But you don't necessary have to go with the platform (the company you buy it from) that provided the information, you should shop around. Different platforms charge different amounts to hold the fund.

Lots of people on here with smaller amounts to invest recommend cavendishonline.co.uk as it was, and may well still be, the cheapest platform.