£5000 to invest for young a child, advice needed

Wulfrune

Hello.

My Wife & I have £5000 we'd like to invest for our 4 year old. Ideally; we'd like to have easy access to the fund in case of an emergency, but it's a jungle out there; with so much choice it's really confusing.

Would someone be so kind as to offer up some ideas please?

Many thanks in advance.

PeacefulWaters

Easy access? Halifax, Lloyds, TSB, BoS. All were paying 3% last time I looked.

But investigate doing something longer term. Investment trusts etc.

xylophone

My Wife & I have £5000 we'd like to invest for our 4 year old.

In the child's own name? You have provided the capital? Be careful of the "£100 rule" if saving outside tax privileged schemes like CTF/JISA.
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem4310.htm
http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/individuals/savings-income.htm
http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/
You would hold any such account in bare trust for your child, the money would be his beneficially and he would have the right to access and control at the age of majority.

You might consider saving regularly into an investment trust- see here http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/ for example and explanation of difference between bare trust and designated account.









You would hold the account in bare trust for your child. The money would beneficially belong to the child, not to you and the child would have the right to access and control at the age of majority.

ozzage

Do you want to SAVE it or INVEST it?

Assuming you really want to invest, there are more complex options with trusts but I'd say to look at two basic ones first:

1. Junior ISA.

You would NOT have access to the money, as it will be locked away until the child is 18.

At that point, the 18 year old will have legal control over the money and can do whatever they like with it.

The annual allowance is not enough for the full £5K but you could split it easily enough with some now and some in April.

It's completely tax-free with no nasty implications or things to keep in mind.

2. Use your own ISA allowance and just "allocate" it to your child.

The money remains legally yours.

If you are already using your own ISA allowance then you may not have enough allowance spare.

The money remains yours until you are ready to hand it over (when you feel they are ready, so they can't squander it)

No tax implications as legally it's still your own money.

We do a bit of both.