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Saving for child's future - Nisa or S&S Nisa

joeyvicks
Posts: 237 Forumite
Hi,
I currently put £25 a month into an Isa for my daughter. We are soon expecting the arrival of our second child and I'd like to do the same for him/her.
The current isa is ok but I'm wondering if I'd be better transferring to a S&S isa for a potential larger return? I've not gone for the junior isa option as I don't want the money frittering away on booze and clothes when they turn 18!!
There's £300 in my daughters isa at present. And with circa 16 years to go until she needs some funds I thought i may be better going for the S&S isa?
I currently put £25 a month into an Isa for my daughter. We are soon expecting the arrival of our second child and I'd like to do the same for him/her.
The current isa is ok but I'm wondering if I'd be better transferring to a S&S isa for a potential larger return? I've not gone for the junior isa option as I don't want the money frittering away on booze and clothes when they turn 18!!
There's £300 in my daughters isa at present. And with circa 16 years to go until she needs some funds I thought i may be better going for the S&S isa?
0
Comments
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My other question would be is there a limit on the number of isas one person can have?
I.e. Can I have one set up for each child both in my name?0 -
You can only pay into one S&S ISA a year.
Over the very long term like 18 years then S&S is likely to be a much better option than cash.Remember the saying: if it looks too good to be true it almost certainly is.0 -
Each person can make deposits into one cash ISA and one S&S each year, and the combined deposits must not exceed the annual allowance. The exception are 16-18 year olds but this won't apply in your children's case for many years by the sounds of it.
You are right, over a period of some 18 years, investment ISAs seem to make a lot more sense than cash ISAs.
If you search the forum you will find several threads started by parents who think they might not want to trust their adult offspring with money at the age of 18.0 -
http://www.moneysavingexpert.com/savings/stocks-shares-isas
You could transfer the existing NISA into a stocks and shares NISA and continue to contribute your £25 (£50?) a month.
Perhaps i-web would suit - an equity income tracker perhaps?
http://www.thisismoney.co.uk/money/investing/article-1583915/A-guide-cheapest-index-tracker-funds.html
http://monevator.com/low-cost-index-trackers/0 -
Thanks for the tips so far.
would an equity tracker be better than a S&S ISA? I really have very little knowledge of either type so I'll do some research. Can someone explain very briefly the difference between the two please in laymans terms!
Am I 100% better off doing either of the above than just sticking with the normal ISA?0 -
Your question is a bit like asking whether a Ford Focus is better than a car....an S&S ISA or an S&S JISA is merely a tax wrapper in which you can have such things as equity tracker funds or shares etc. Similarly, a cash ISA or a cash JISA is just a tax wrapper for cash savings. The tax wrapper simply says that you can pay in up to the allowance each year, you don't have to declare the contents to HMRC, and any gains made are free of tax.
Nobody can give you a cast-iron guarantee whether S&S or cash will be better but historically investments have outperformed cash savings over longer periods.
You should read up about investments, e.g. here. Avoid any "ready-made" S&S ISAs since they generally charge very steep fees without detailing to you what those fees are.
Also worth a read:
http://www.telegraph.co.uk/finance/personalfinance/investing/isas/10645892/Where-professional-investors-put-their-childrens-Isa-money.html
http://www.telegraph.co.uk/finance/personalfinance/investing/isas/9956386/How-to-use-a-Junior-Isa-to-build-a-nest-egg-for-your-child.html
http://www.telegraph.co.uk/finance/personalfinance/savings/9868588/Junior-Isas-How-to-pick-the-best-saving-plan.html0 -
Thanks for the pointers so far. I've read all the links, many thanks.
Is it practical for me to transfer the money from the current isa to an iWeb arrangement and continue to pay in £25/month?
The other thing I was wondering was once second baby is born where would I pay savings into? If I were to pay it into the same iWeb isa then how would I know who's was who's if you get me? It will be just one pot of money made up of 3 years saving for one and one month for the other.
Help much appreciated again0 -
Set up an ISA for each of the kids.0
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Archi_Bald wrote: »Set up an ISA for each of the kids.
But if you can only have 1x ISA & 1x s&S ISA how do I have say 1x s&S isas in each of their names?0 -
Each child can have their own JISA https://www.moneyadviceservice.org.uk/en/articles/junior-isas0
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