Junior ISA

jimmyinin

Been researching a lot on Junior Stocks and Shares ISA and I am confused to the charges they take- platform charges, initial charges and fund charges. Can anyone recommend a Junior ISA which does not have complex charges and has been quite steady with the rise and fall of the market ? Appreciated.

jimmyinin

Can anyone guide me to what is the best way to save for kids at an early age ? I recently had a baby and he is soon going to be one year old and my long term concern would be to pay off his excessive debts he could accumulate over the years - University and maybe pay 10% towards his first house. What should be the plan ? I have started putting part of his child benefit into a children's pension - not sure if that was a good idea but looking at the current trends, I don't think kids will be thinking of investing into a pension in the long run. Started looking into other options which could give me a potential growth for over 15 years term, but unsure which way should I go ? Can someone advise how should I start ? Many Thanks

Lomcevak

jimmyinin wrote: »

Can anyone guide me to what is the best way to save for kids at an early age ? I recently had a baby and he is soon going to be one year old and my long term concern would be to pay off his excessive debts he could accumulate over the years - University and maybe pay 10% towards his first house. What should be the plan ? I have started putting part of his child benefit into a children's pension - not sure if that was a good idea but looking at the current trends, I don't think kids will be thinking of investing into a pension in the long run. Started looking into other options which could give me a potential growth for over 15 years term, but unsure which way should I go ? Can someone advise how should I start ? Many Thanks

Start by working out the details what you want to achieve. You'll need to make some assumptions, university fees and house prices won't stay the same, but you need a reasonable target. And also think about when you want to achieve that goal - a pension is the wrong choice if you are looking for something to pay for university and a house deposit, for example.

Say you decide that university costs will be £60k in 20 years time, house prices will double so a 10% deposit on an average place will be £55k, and you want your child to buy a place when they graduate debt-free. So that's £115k in 20 years; assuming conservative growth of 3% you should be saving about £350 a month. More optimistic growth means a bit less, £275 maybe. Tied in with this is the choice of what happens if you don't make it - you might decide it's a disaster if young jimmyinin pays university fees and so you should save a bit extra and use low-risk investments to make sure you get to your goal, or you might decide 'bad luck' if you don't get there and save a bit less. That same thought process decides what you invest in - higher risk investments may return more, but are also less dependable than stashing money in a low-growth, zero risk cash ISA. Choices, choices

If you're not strapped for cash then saving the child benefit is a good idea, over the years it builds up to a decent sum, but on its own it won't get close to what you want.

jimmyinin

Many Thanks for your advise .

I would hope my kid is debt free when he graduates. To ensure I achieve what avenues should I choose to go – Investment Trust, Cash ISA or Stock and Shares ISA ??


They are so many to choose from but they are all packed up with charges which could change anytime.

I wonder if someone can pinpoint their experiences.

xylophone

A pension is all vey well but it should be the last on the list rather than the first?

When I was one of the trustees for a minor a number of years ago ( before CTF/JISA), we held deposit accounts of various kinds, National Savings products, shares and unit trusts - the child also had a stakeholder pension which he transferred into a SIPP.

You could use a stocks and shares JISA ( or a split of stocks and shares cash) but you do need to accept that the child can opt to control this from the age of 16 and have unfettered access from the age of 18.

A child has the right to access and control of the assets in a bare trust from the age of 18 (16 in Scotland).

Remember that if you give money to your child and it is held outside tax privileged accounts like the JISA, you need to bear in mind the "£100 rule" - see here http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/

You could choose simply to save in your own name and make gifts to your child when you choose, but should you fall on hard times and need means tested benefits, this money would be taken into consideration as yours.

With regard to charges, if you are investing in a stocks and shares JISA/ISA there is no way to escape an explicit charge - even if you are saving in cash there is a charge even if it is not explicit - the interest rate you receive must take into account the provider's costs.

If you decide to go the JISA route, the best available cash JISA (provided you are prepared to open a cash ISA of your own with them) is the Halifax offering

http://www.halifax.co.uk/isas/cash-isas/junior-cash-isa/?srnum=1

They do offer a stocks and shares JISA as well, so you could ( if you wanted absolute simplicity) consider a split between the two.

https://www.gov.uk/junior-individual-savings-accounts/overview The subscription limit is now £4000.

Otherwise http://www.money.co.uk/savings-accounts/junior-investment-isa.htmhttp://www.money.co.uk/savings-accounts/junior-investment-isa.htm might be worth a browse.

jimmyinin

The £100 rule is applicable for kids but to my understanding we get taxed for everything you save .. Be it Cash or Adult ISA.


Agreed should I fall on hard times, at least I can access the money when and where its required and with a child’s right to access there is also a high possibility he could use for his personal purpose once he turns 18.


So you reckon its best to open an Adult ISA and use the allocated wrapper and use it for child’s education.


JISA with HBOS is fine but the only downside is you need to open a bank account with them and then an ISA Account which again requires you to maintain an agreed amount each month.

Vortigern

jimmyinin wrote: »

JISA with HBOS is fine but the only downside is you need to open a bank account with them and then an ISA Account which again requires you to maintain an agreed amount each month.

I don't believe you need a Halifax current account to open a Halifax ISA, so there's no monthly funding requirement.

You open an ISA for yourself, pay in a pound, then open a JISA for the child, who then gets 6% interest - far better than any adult ISA

jimmyinin

So Is JISA the only option we could go for or perhaps amalgamate with an adult ISA.

xylophone

JISA with HBOS is fine but the only downside is you need to open a bank account with them and then an ISA Account which again requires you to maintain an agreed amount each month.

I don't see any of this in the link I posted in post 5?

You can't amalgamate your ISA with your child's ISA or indeed anybody else's ISA - the clue is in the name Individual Savings Account.

If you are unhappy about the child's having the right to access the JISA or bare trust at 18, then realistically ( unless you are going to set up a discretionary trust with all that that implies), see here http://www.hmrc.gov.uk/trusts/types/minors.htm) then you will need to save/invest in your own name and make gifts at a time of your choosing. This might be worth a look. http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm