Money For My Son

JoeS132

Hi All

I have a 4 yearold son, and since he was born I've been DDing 80 pounds per month into a Virgin tracker ISA.

It's got a fair bit of money (relatively speaking) in there now and I'm wondering if this is the best place for it or whether I need to be looking at trust funds or some other thing? I really know nothing about this stuff. But obviously I want to make sure it's doing as well as it can for him.

Any advice would be much appreciated. Thanks!

ColdIron

Virgin are one of the most expensive platforms at 1% ongoing charge, close to the top of my list would be considering a change to another provider once I had decided precisely what I wanted to invest in

atush

Does he have a Jisa? Or do you want to keep access to the mon ey to a later age than 18?

Have you considered an investment trust savings plan (either ISA'd or not)?

xylophone

If he is 4, he might have a CTF which should be transferable to the more flexible JISA next month.

https://www.gov.uk/child-trust-funds/overview

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

http://www.hl.co.uk/investment-services/junior-isa

https://www.hl.co.uk/free-guides/investing-for-children

If not using a JISA, consider moving the Virgin ISA to a cheaper platform with more choice.

http://monevator.com/compare-uk-cheapest-online-brokers/

JoeS132

Thanks for the help guys.... JISA, investment trust savings plan, CTF - this is all alien to me
I'll read your links xylophone and try to make some sense of it.
I don't know if it's my dyslexia but I find this kind of technical information impenetrable.
Thanks for the links

JoeS132

May I just check please - Junior ISA's are 4000 limit per year... but a normal ISA is 15,000. What's the difference, and why is the limit much lower on a JISA? I think it's about 4000 he has, so if I transferred it would be pretty much all his limit gone for the year. Is a JISA much better?

bowlhead99

Children born after 1 Jan 2011 can have a Junior ISA. But children born in the few years before that (on or before 31/12/2010) would have a Child Trust Fund (CTF) opened for them, using a £50-250 voucher provided by the government depending on date of birth ; if the parent did not cash in the voucher to open the child's CTF with a provider of their choice, one would have been opened for them. So, depending on when your 4-year-old was actually born, he may already have a CTF (i.e. if he is older than 4 years two months two days)

If you have a CTF, you can't also open a Junior ISA. You can keep putting money into the CTF, up to the annual CTF limit. It is recognised that CTFs are not going to be very popular going forward as only a few years worth of children qualified for them which has made them a niche product and not as freely available or as cheap to run as Junior ISAs.

Therefore, from the 2015/16 tax year onwards, the government agreed that you will be able to convert a CTF into a JISA. Guidance on how to practically do that will be produced by the JISA providers in due course. But you can't do it at the moment and if you have a CTF you can't just go and get a JISA as well.

So, if he already has a CTF somewhere you can't open a JISA - yet. Instead, you could put more money into the CTF this year and transfer/convert it to a JISA once allowed, or you could not bother topping it up and still transfer/convert it to a JISA once allowed. After you convert the CTF to a JISA, you will be on the new set of rules and can make annual contributions in line with those rules.

If he is too young to have a CTF at all (born 1/1/11 or later) you don't need to worry about any of that and you can just go and get a JISA tomorrow.

Junior ISA's are 4000 limit per year... but a normal ISA is 15,000. What's the difference, and why is the limit much lower on a JISA?

JISAs are for children. Children generally have less money than adults. So, they set the limit on JISAs to be lower than the limit on normal 'adult' ISAs which people can have from age 16. Another difference is that adults are responsible people and can go and cash in their ISAs at any time and get the money back to spend it on something. A JISA can't be touched until the child is 18 (although it can be transferred between ISA providers, just not taken out into the child's pocket)

I think it's about 4000 he has, so if I transferred it would be pretty much all his limit gone for the year. Is a JISA much better?

It is better for you because if you put it in a JISA in his name, you are not using up your own adult ISA allowance. You are only allowed to contribute to one S&S ISA and one cash ISA in any tax year, so it could be a bit restrictive if you do all his investing in your name and only want to do £80 a month for him.

Also, if the money is in his name in his JISA you will not be tempted to spend it, because it can't be touched until 18. And if the money is in his name in his own JISA instead of your ISA, if you personally go bankrupt or get chased by creditors or end up on means-tested benefits, nobody will be able to say, "hey, you have £4000 in an account right here". The assets will officially belong to the child.