Best Investment Platform For New Son

ChopperST

Hi everyone,

My first son was born yesterday and today my Mum arrived to see him bearing a gift of £500. I want to invest this for him until he is 18 and will actively educate him on astute financial planning when he is older in the hope he appreciates the gifts he receives over the years alongside the magic of compound interest and continues to treat the money with the care it will be given over the next 18 years.

The purpose from our point of view for this money is a house deposit or university fees but ultimately the money will be his to spend as he chooses.

Struggling to find a comparison table for specifically child accounts but the key points are;

1. To be in my sons name
2. To exclusively invest in funds
3. Ideally hold the Vanguard Lifestrategy funds but I would be happy to lifestyle the investment myself as time went on using mix and match bond and equity funds.
4. An initial investment of £1000
5. A minimum of £1000 invested each year from years 1-18 of his life.
6. Have a low platform fee.

Thanks for any advice.

dunstonh

Why not invest directly with a fund house?

Congrats btw.

ChopperST

Thanks.

Am considering Charles Stanley Direct at 0.25%

I am currently with Fidelity but they add an annual fee of 0.95% on top of their 0.35% management fee for a JISA

westy22

You could also investigate Youinvest who don't charge any extra for a JISA, are 0.20% on funds and have a regular investment offer of £1.50 per deal (you don't actually need to invest regularly as such and can make a one-off investment but on a set date).

https://www.youinvest.co.uk/charges-and-rates/jisa

bowlhead99

ChopperST wrote: »

Thanks.

Am considering Charles Stanley Direct at 0.25%

I am currently with Fidelity but they add an annual fee of 0.95% on top of their 0.35% management fee for a JISA

You've misunderstood this.

In attempting to explain their charges, they have said it's a 0.35% annual service fee (which is their version of the Charles Stanley Direct charge of 0.25%) and then the ongoing charges of the fund itself which will be taken from the funds' assets which might be 0.95% or might be some other number - it depends what fund you choose to buy in the ISA.

https://www.fidelity.co.uk/investor/isa/isas-explained/discounts-charges/jisa-discounts-charges.page
The ongoing charges are the fees taken from the fund's assets by the fund manager to cover the cost of running and managing the fund. The service fee is paid to us, and covers everything we offer you, such as access to funds, accounts, investment articles and insights.
[pictorial]
Please note, this graphic represents a typical fund, but the actual breakdown of costs will vary between funds. For specific fund details, please see the relevant Key Investor Information Documents (KIIDS) provided with each fund.

In practice you would replace the 0.95% example with whatever the actual charge from your fund manager is going to be.

e.g.
Vanguard Lifestrategy, replace 0.95% with 0.24% (plus Vanguard's 0.1% dilution levy on each purchase)
Blackrock Consensus, replace 0.95% with 0.23%
L&G Multi-index, replace 0.95% with 0.31%
- or at the other end of the scale
Schroder Multimanager Diversity Tactical, replace 0.95% with 1.24%
Jupiter Merlin Growth, replace 0.95% with 1.67%

If you abandon Fidelity you are not saving 0.95%, that number is going to depend on what fund you have and is also payable via Charles Stanley or anyone else. You are just saving the 0.35% platform fee and replacing it with someone else's platform fee (or transaction based fee or a combination).

In context, 0.35% at Fidelity versus 0.25% at Charles Stanley - it's a saving of 0.1% right? And in the first year you'll have £1000 invested, so your saving for that year is a pound. Meanwhile all your own assets are with Fidelity except your baby's ISA which is at Charles Stanley with a different login password and a different customer service team and statements available on different dates and so on. Yes it is the MSE thing to do, saving a pound. Others would say "f that". The reason to do it would be to try out the Charles Stanley service before moving your other assets from Fidelity and saving the 0.1% on everything.

ChopperST

Thanks as always bowlhead. I anticipate my own portfolio to have reached an amount where I will be moving from Fidelity next year to a fixed fee broker so I'm not bothered about using multiple accounts. Also Fidelity don't do the Lifestrategy funds and that is what I want for my son as I already rebalance my own portfolio as I use a combination of HSBC / Fidelity trackers I'd like his to be fire and forget except when I want to increase the bond allocation when he gets older.

I realised my error last night re the fees but thanks for pointing it out, it is so hard to go digging around the various fund houses websites to actually find the fees for a alot of products.

A real stupid question but how do I get the funds in with the cheque being in his name? Do I have to open him a bank account in his name? Can a child have a debit card or do the funds have to be sent via bank transfer?

Oli.s

Probably simplest to tell mum what your planning and have her re write the cheque in your name?

dunstonh

How about the L&G MI funds direct to provider rather than platform?

0.31% plus platform charge or 0.50% if direct from L&G (with no platform charge).

As its a small investment and you are likely to use multi-asset funds, you are not likely to use a lot of platform services, if any.

mvarrier

I opened up a JISA using fidelity but via cavendish online. It has the same low charge as charles stanley direct. It does have the VLS funds.

ChopperST

Thanks all for your help.

atush

Jisas should be fine for you, if as you say you will educate Jr to not overspend.

I did not have the choice when my 3 boys were young, so opened Investment trust savings plans with me as the owner and them as designee. These days they can be Jisa'ed but not back then.

the non Jisa catch is, that I control the accts even after the age of 18. So could be useful if your lessons in life dont stick?