What's the best long term way to save for my child

Youll

Hello All,

I need some advice. I want to start saving for my newborn, I would like to put away £100 a month until he is 18 or 20ish.
I have looked at junior ISAs, Premium bonds and Young saver accounts but can't decide which would suit my specific needs best and if I'm likley to encounter and pit falls.

What do you think would be best?
Thanks.

Archi_Bald

You got quite a wild selection there but none of them seem to be investments. I would recommend some more reading: http://monevator.com/how-to-invest-for-children/

jimjames

Youll wrote: »

Hello All,

I need some advice. I want to start saving for my newborn, I would like to put away £100 a month until he is 18 or 20ish.
I have looked at junior ISAs, Premium bonds and Young saver accounts but can't decide which would suit my specific needs best and if I'm likley to encounter and pit falls.

What do you think would be best?
Thanks.

Just remember that a Junior ISA is just a wrapper and could contain cash or shares/funds. For an 18 year term I'd be looking fund investments not cash so I wouldn't touch the premium bonds or young saver account either.

xylophone

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

The money belongs to the child absolutely and he is entitled to full access at 18.

If you are unhappy about this, you might regard your own ISA savings as "earmarked" for your child but the money remains yours and you can hand it over (or not) to your child at the age of 18 or 20 or use it to pay his university fees etc.

Sam_J12

xylophone wrote: »

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

The money belongs to the child absolutely and he is entitled to full access at 18.

If you are unhappy about this, you might regard your own ISA savings as "earmarked" for your child but the money remains yours and you can hand it over (or not) to your child at the age of 18 or 20 or use it to pay his university fees etc.

This troubles me actually! I was considering putting into a junior S&S ISA the £82.50 a month child benefit I receive for my very young son. Given a fairly conservative 5% return a year in a stocks and shares ISA, I worked out he will receive close to £30k on his 18th birthday. I'm not sure a typical 18 year old can be trusted with this!

It would be great if there was a choice to stagger the payments e.g. receive 25% at 18, 25% at 21 and 50% at 25.

xylophone

I

t would be great if there was a choice to stagger the payments e.g. receive 25% at 18, 25% at 21 and 50% at 25.

There is no such choice.

You might decide how much you would be happy for your child to have at age 18 and save a limited amount in a cash JISA?

With regard to 18, 21, 25 etc, have you never known friends/relatives who have come into an inheritance at an age when they were supposed to have some common sense and blown it within a few months?

Sam_J12

xylophone wrote: »

There is no such choice.

You might decide how much you would be happy for your child to have at age 18 and save a limited amount in a cash JISA?

With regard to 18, 21, 25 etc, have you never known friends/relatives who have come into an inheritance at an age when they were supposed to have some common sense and blown it within a few months?

I don't think teenagers are known for being particularly responsible with money to be honest. Some are, some aren't and I have no idea what my child will be like. I am not comfortable with giving an unknown 18 year old £30k and expecting them to have the financial nous to use it wisely, but would also rather the money was segregated from my own funds as I save it for him. I just think it is a shame there is no option where the money can be released in a staggered way.

Archi_Bald

Sam_J12 wrote: »

I am not comfortable with giving an unknown 18 year old

If their 18-year old is unknown to them or irresponsible with money, the parents have to take at least some responsibility for it. It's not as if they wake up one morning and have a young adult popping in to pick up the cash that they have saved for them for the last 18 years.

xylophone

It would be possible to set up a discretionary trust but really unless there is a very substantial cash sum to start with and you are prepared to see a solicitor to set up the trust, and deal with the tax aspects and lose the tax advantage of saving for your child within a JISA, there seems little point?

You could choose to save a limited amount into the cash JISA and save in a stocks and shares ISA in your own name - the problem with this is that should you ever require means tested benefits, you would be required to use your ISA savings even though you regarded them as earmarked for your child.

You can't know what your child will be like at 18 but you can try to give him a sound financial education from the beginning.

Involve him in the JISA from the time he can understand the concept of saving?