Children's accounts

Reaper

nande2000 wrote: »

Investment accounts are too risky for this kind of thing

My view would be child accounts are exactly the right things to use investments for. The theory being investments ought to outperform savings over the long term and child accounts are generally set up for the long term. Of course you have to be prepared to stomach a stock market crash every 5-10 years without panicking.

But do whatever you are comfortable with.

colsten

nande2000 wrote: »

I guess the simplest answer is premium bonds.

Premium Bonds are just about the worst of all options as they literally guarantee that the money you put in loses value. The average annual return is 1.3%, inflation runs at around 1.9% presently.

Until very recently, you could get a 6% JISA at Halifax. This has now been reduced to 4% but they still do a regular saver which pays 6%.

It's true that most banks insist on Branch / Phone / Post only accounts for kids but I am pretty sure you could open accounts for all 3 at the same time. And all of them do figure on the providers' websites, so you can do your research in the comfort of your home.

Did you read the MSE article? http://www.moneysavingexpert.com/savings/child-savings-tax-free

jamesperrett

We've gone with The Children's ISA to invest a regular amount in stocks and shares for our little one. They just direct debit a regular amount and invest it in the fund we've chosen. There's no need to do anything more unless you want to top up with one off payments.

jimjames

nande2000 wrote: »

Investment accounts are too risky for this kind of thing, I guess the simplest answer is premium bonds.

It might be an idea to do some research on risk as it sounds like you don't really understand different risks.

Premium bonds may give you exactly the same money back but that won't have very much buying power in 20 years time. There are lots of different types of risk you need to consider, only one is investments dropping short term.

nande2000

jimjames wrote: »

It might be an idea to do some research on risk as it sounds like you don't really understand different risks.

Premium bonds may give you exactly the same money back but that won't have very much buying power in 20 years time. There are lots of different types of risk you need to consider, only one is investments dropping short term.

That's not patronising at all. Believe me I understand what Banks will tell you about risk full well. After investing in a low risk unit trust that lost money big time there is only high risk when it comes to stocks/shares, even then you are much better off buying the shares directly as management fees are a rip off.

nande2000

jamesperrett wrote: »

We've gone with The Children's ISA to invest a regular amount in stocks and shares for our little one. They just direct debit a regular amount and invest it in the fund we've chosen. There's no need to do anything more unless you want to top up with one off payments.

Is that an online one ?

nande2000

colsten wrote: »

Premium Bonds are just about the worst of all options as they literally guarantee that the money you put in loses value. The average annual return is 1.3%, inflation runs at around 1.9% presently.

Until very recently, you could get a 6% JISA at Halifax. This has now been reduced to 4% but they still do a regular saver which pays 6%.

It's true that most banks insist on Branch / Phone / Post only accounts for kids but I am pretty sure you could open accounts for all 3 at the same time. And all of them do figure on the providers' websites, so you can do your research in the comfort of your home.

Did you read the MSE article? http://www.moneysavingexpert.com/savings/child-savings-tax-free

I've got a couple of accounts with the Halifax already for two of my kids. Their customer service is woeful. On one occasion opened a bond for a child over the phone only to get a letter a few days later with my name on it, so had to be cancelled and re opened. They have lost photocopies of birth certs, not declared an account tax free...I could go on.

There is a Nationwide online account giving 3% at the moment I may try that.

jimjames

nande2000 wrote: »

That's not patronising at all. Believe me I understand what Banks will tell you about risk full well. After investing in a low risk unit trust that lost money big time there is only high risk when it comes to stocks/shares, even then you are much better off buying the shares directly as management fees are a rip off.

With respect saying you lost money on a low risk unit trust tends to indicate that you don't really understand risk or understand investing. Im not sure what banks say about risk as I've never asked them but there is a standard disclaimer for all investments that every provider gives.

You could have invested in a higher risk fund in the FTSE100 in 2007 that dropped 50% over the next 2 years but you would still be in profit now. Losing money would ssuggest that you withdrew the money when it had dropped rather than waiting. Investing over an 18 year period will have ups and downs but compounded returns should comfortably beat cash.

Buying shares directly can work if you have enopugh money but not many people have £20k-£50k spare to be able to do that so for most a low cost tracker fund is much better value.

Grandad2b

This is exactly the discussion I wanted to start: I don't understand how to assess the risk of different investments or how to choose between different types.

Suppose I wanted to build up a sum to help my future grandchildren buy their first home: there are so many unknowns, I don't know how many I will be trying to help, where they will want to live, how much they will need. How would I do this? It seems like the best plan would be to simply save as much as possible. But I could afford to tie the money up for a couple of decades. And of course there's no guarantee I'm going to be around by the time they're ready to make use of the funds

xylophone

Do you intend to put the money into the child's own name? If so, he will have the right to access either on demand or, if held in bare trust, at the age of 18, (16 in Scotland).

If held in JISA, the child has the right to control at 16 and access at 18.

You can choose cash or a stock market based investment (OEIC/investment trust).

You might choose an investment plan held in bare trust - example http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

Note that you can also choose a designated plan but the investment remains yours and part of your estate - if you wanted it to go to the child in the event of your death, you would make specific mention of this in your will.