New Baby - Need savings account advice please

ptrichardson

Hi all,

We've just had our first baby, and we will be needing to open a savings account soon and was hoping for some advice.

I don't want to be changing every year just to get the best deal, so was hoping for some tips on accounts that consistently perform well, if not the absolute best.

I'd actually like 2 accounts.

1 - Savings account - one that the child can access to deposit and withdraw from other the years

2 - Investment account - one that we (the parents) can use to set up a nice fund to help with Uni fees / Training costs / House Deposit when she is 18


Thanks very much in advance,
Peter

coastline

http://moneyfacts.co.uk/savings/childrens-savings-accounts/

atush

For door no 2, investments, i'd go with a Jisa or an investment trust savings okan in your name with ehe child as designee.



I did this for my 3 boys for Uni expenses.

For reg savings acct, use the link above, but I believe Halifax has the best.

ptrichardson

Seems to be a few savings accounts at the 3% mark (I'm ignoring the regular saver accounts as they are not suitable).
But which is likely to be a teaser rate that will end up being rubbish within a couple of years, and which are likely to remain on a best-buy table for the long-term?


Also, looking for advice on the investment front - is Shares ISA the way forward for a 18 year investment? (Will be paying the family allowance into this account, indirectly, so about £1000 per year)

ChopperST

ptrichardson wrote: »

Seems to be a few savings accounts at the 3% mark (I'm ignoring the regular saver accounts as they are not suitable).
But which is likely to be a teaser rate that will end up being rubbish within a couple of years, and which are likely to remain on a best-buy table for the long-term?


Also, looking for advice on the investment front - is Shares ISA the way forward for a 18 year investment? (Will be paying the family allowance into this account, indirectly, so about £1000 per year)

For a 18 year timescale equities will almost certainly beat cash. You should be looking to hold the majority of the investment in equities in the early years, moving towards less risky assets as the target date approaches.

Archi_Bald

http://monevator.com/how-to-invest-for-children/

xylophone

Remember that parents giving money to their minor unmarried children outside tax privileged accounts like JISA need to have regard to the £100 rule in respect of income earned on it.

See http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/
under "Things you might like to know".

http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/

Re JISA see https://www.gov.uk/junior-individual-savings-accounts/overview

ptrichardson

ChopperST wrote: »

For a 18 year timescale equities will almost certainly beat cash. You should be looking to hold the majority of the investment in equities in the early years, moving towards less risky assets as the target date approaches.

Any recommendations for products that are likely to remain competitive over the next 5-10 years?

xylophone

Have you decided on whether or not you will use the JISA?

Have you understood the implications of the £100 rule?

Do you wish to save in cash or in some kind of stock market based scheme?

chile_paul

ptrichardson wrote: »

Hi all,

We've just had our first baby, and we will be needing to open a savings account soon and was hoping for some advice.

I don't want to be changing every year just to get the best deal, so was hoping for some tips on accounts that consistently perform well, if not the absolute best.

I'd actually like 2 accounts.

1 - Savings account - one that the child can access to deposit and withdraw from other the years

2 - Investment account - one that we (the parents) can use to set up a nice fund to help with Uni fees / Training costs / House Deposit when she is 18


Thanks very much in advance,
Peter

Just my personal perspective on this having done similar for our newborn 3 years ago who is growing up too rapidly.

We decided to set up an Investment account when she first arrived on the scene - however we made a mistake of not fully understanding the fee's when we established a Child Investment Plan with F&C. With a flat £25 a year fee and additional charges for each deposit which were taking a considerable chunk out of deposits at Christmas and Birthday pressies the charges were wiping out any gains. As a result we're now moving into either a JISA or even using some of our own ISA pot for a fund which we will give to our little one when she is all grown up.

We also considered a separate savings account; on reflection though we've decided to hold off on this until she is older (7 or 8?) and then involve her in the account opening process, going down to the branch to open it etc as part of educating her about how to manage money sensibly.

TheBoffin

ptrichardson wrote: »

Any recommendations for products that are likely to remain competitive over the next 5-10 years?

As others have said, the key question for the investment part is really how much risk you're willing to take.

I looked up some numbers for you to illustrate (I run an investment website which covers Junior ISAs).

You can see there are no guarantees about what will be most competitive and there's quite a big difference in terms of upside and downside. (And note that "bad case" is not the same as "worst case")

The below are all over 7 years for a £100 per month investment:

Low risk investment
Most likely = 2.35% or £9,100
Good case = 4.21% or £9,800 (1 in 6 chance of beating this)
Bad case = 0.49% or £8,500 (1 in 6 chance of doing worse than this)

Medium risk investment
Most likely = 3.61% or £9,600
Good case = 7.32% or £11,000
Bad case = -0.11% or £8,400

High risk investment
Most likely = 5.04% or £10,100
Good case = 11.08% or £12,800
Bad case = -1.00% or £8,100

Very high risk investment
Most likely = 6.38% or £10,600
Good case = 15.68% or £15,300
Bad case = -2.91% or £7,600



Hope this is helpful.