14 year old with £1000 to save for 7 years

NOWSE

Our daughter is 21 shortly and we are giving her £1000. As we want to be fair to our 14 year old son, when he reaches 21, we have decided to put the same sum away now. The problem is, what to do with the money?

Has anyone any suggestions of suitable savings institutions?

Also, the daughter is still at university and wants her money put out of temptations for a couple of years. Again, any suggestions?

Tongue

Tricky one this.
Personally I would invest it on those electronic gaming machines in your local beeting shop and make a killing.
Its one chip on RED and one chip on BLACK, this triggers the machine to think its paid out which it has if zero does not show.
Just keep on doubling up on zero till zero shows and bobs yer uncle.

Paul_Varjak

So your son will, effectively, get more money when he is 21. Is that fair?

I know my grandma always bought me a present when it was my sister's birthday but did not buy my sister one when it was my birthday! So maybe it is OK to favour the son then?

FOR YOUR DAUGHTER:
What about Premium Bonds? The prospect of a win and the fact that you cannot just walk into a bank to withdraw your money may be incentive enough to keep the money there!?

However, you must remember that Premium Bonds does not favour non-taxpayers. In fact it favours higher-rate taxpayers the most.

Otherwise, I would go for the Alliance & Leicester Savings Account (5.35%) if she will not pay tax until she spends it; otherwise, a cash-ISA.


FOR YOUR SON:
Your son is too young to have an ISA (16 minimum) but you can still consider the above A&L savings account or, say, investing in unit trusts.

Everest

NOWSE wrote:

Our daughter is 21 shortly and we are giving her £1000. As we want to be fair to our 14 year old son, when he reaches 21, we have decided to put the same sum away now. The problem is, what to do with the money?

Has anyone any suggestions of suitable savings institutions?

Also, the daughter is still at university and wants her money put out of temptations for a couple of years. Again, any suggestions?

Seems to me you need a low risk solution to this problem for two reasons:

1. You want to make sure that your son gets a similar amount to your daughter when he reaches 21, taking the low risk, reasonable return route means that in the 6-7 years he has got until he becomes 21, the £1,000 you invest will not have been lost or reduced.

2. Low risk, reasonable return will mean that the invested sum will at least keep up with inflation but will not race ahead meaning your son gets much more than your daughter did when she was 21.

Following these two reasons I see this as being able to deliver the most equitable solution for both your son and daughter. To manage it I would suggest setting up a savings account with a bank like ING Direct, A&L or a similar bank offering rates of 5% or over. Just make sure that you check the rate you opt for fairly regularly just to make sure it has't become uncompetitive.

Alternatively, you could try and invest in a somewhat more risky investments like shares (reinvest dividends) or bonds but be prepared to top the amount these are worth back to £1000 if they should perfom poorly. If they do well perhaps you could consider giving some of the return to your daughter to even it up again...but who knows, in seven years your daughter may have turned the £1,000 you gave her into so much more and she won't be bothered in the slightest. A Guaranteed Equity Bond that promises to deliver all the upside returns on a given index but to keep your original capital safe might be an interesting option to ensure you keep the £1000 but potentially make a decent return.

Hope this helps.

deemy2004

NOWSE wrote:

Our daughter is 21 shortly and we are giving her £1000. As we want to be fair to our 14 year old son, when he reaches 21, we have decided to put the same sum away now. The problem is, what to do with the money?

Has anyone any suggestions of suitable savings institutions?

Also, the daughter is still at university and wants her money put out of temptations for a couple of years. Again, any suggestions?

Put the £1k into an Nat Savings index linked certificate, that way you are guaranteed of a gain in real terms regardless of what happens to interest rates and inflation...

I think the longest cert is for 5 years so you would roll it over at the end of the 5 year term into a 2 year bond.

Oh and its all tax free so no need to think about the tax position of you or your son...