Baby Daughter Savings- which one??

momorris1980

hi everyone - long time lurker...first time poster
Im more of a mortgage lurker, getting helpful hints and tips there, not really a saver, as trying to pay off the mortgage, so am a bit stuck at what i should be looking for savings wise for my daughter.

I know advice or recommendations cant be given, however a helpful jolt in the right direction would really be appreciated.

My daughter is now nearly 2 years old, and ive just held off for too long, been lazy in fact and not set her up a savings account/ trust etc etc...(not sure of what they are called now a days)

Im wanting to set her an account up which she cant touch until her 16th /18th / 21st birthday whichever is easiest, and would like to add a set monthly amount, but also which relatives can add to on birthdays / Xmas etc. I can put in a lump sum of £500 / £1000 to get it going, monthly amount of £50 to £100ish

Its just all changed from when i had them when i was a kid ( my parents had a post office savings account for me, and when i got my first paper round had to put £2 a week away into an endowment policy, ( i remember the guy knocking for the money every week ha ha) and then opened another when i joined the army at £30 a month) these paid out recently and i was very happy with the amounts.

Ive seen stocks and shares ones for kids, and while i know there is a risk involved, so long as she ends up with what was put in over the years, and not less then id be happy with a bit of risk reward for her.

Like i say any jolts or pushes in the right direction would be most appreciated and aplologies if ive contradicted myself in anything ive said!

hope everyone is having a great xmas and new year!!

xylophone

JISA?

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

http://www.thisismoney.co.uk/money/investing/article-1587994/Junior-Isa-Child-Trust-Fund-How-save-invest-children.html

You could hedge your bets and have both S&S and cash.

Best rate on cash is from Halifax if you have an ISA with them.

http://www.moneysavingexpert.com/savings/junior-isa

Flobberchops

I'm in a similar situation and am doing pretty much what Xylophone outlined: Cash JISA and S&S JISA (both with Halifax as I'm a simple sod and I like keeping things as centralised as possible). I pay £50 a month into the S&S JISA by d/d, and another £50/mo (or whatever I can afford) into a 6% Halifax Kid's Regular Saver. At the end of 12 months I'll dump the Reg Saver's balance into the cash JISA and start afresh. Any Xmas/birthday money goes straight int the JISA. Come April I'll consider opening an adult ISA with them too to bump the cash JISA up to 4%.

The Halifax S&S JISA is a FTSE 100 tracker fund which will hopefully have enough time (18 years) to smooth out fluctuations and let pound-cost averaging do its thing.

In both cases it's held in my daughter's name but not accessible until she turns 18.

Dird

An alternative would be to not have a JISA but keep it yourself (requires restraint by yourself). With a JISA your daughter will have access to it once she turns 18. While a daughter may be more sensible than an idiot son who may instantly choose to blow it all on a car and £2k+ insurance (and you have no control over whether they would or not) they're still free to do anything wasteful with it.

With my soon-to-be nephew (currently in a slow labour) I've paid into a fund & said he can have it after graduating uni...if he slacks off in school & doesn't go uni then he gets nothing.

Alice_Holt

I set up savings plans for my neices.
Investment Trusts (Scottish Mortgage, Aberdeen UK Tracker, Witan) £100 a month into a Childrens Savings Plan (in a bare trust) till they were 13, then £1k a year into a Cash Childrens Savings plan.
Worked well - IT's now worth about 4 times the original cost.

Currently JISA would be a good tax wrapper for such investment.

webnibbler

If you wanted to invest for your daughter for the really long term you could also consider a junior SIPP. Don't think many people consider these but it could really help in the future.

I set one up for our two year old daughter last year. I'm not intending to pay into it regularly, only now and again when there is some spare cash from birthdays, Christmas etc. Hopefully it should benefit from decades of compounding before she can access it (whenever that is!)

We also went down adding savings to our ISAs for her rather than open a JISA. Mostly so that we have control over the balance when she turns 18.

momorris1980

hi everyone
Many thanks for your help and advice, i saw the halifax 6% one for her when i was researching, and might do what Flobberchop is doing, Alice yours sounds really interesting, and ill research it some more before i decide, also like the thought of me being in control, so she cant waste it at 16/18 years old..just hope there are no tax implications, because its in my name.. many thanks once again xylo, flobber, dird, alice and web, very kind of you to reply

atush

As a mtg payer offer, I am guessing you think in cash terms. AS opposed to investment terms.

I would advise, for a baby to always save in equities over cash (be it in a jisa or not) as I know of no times of 18 years or more that meant cash did better than equities. And should you invest monthly/yearly- this would mitigate any risk of investments falling just after you invest.

xylophone

just hope there are no tax implications, because its in my name..

If you invest/ save in your own name then the cash/assets are yours, are taxed as yours and would be taken into account should you ever need means tested benefits.

If you give money to your child outside tax privileged accounts like JISA and income arises on savings/investments see

http://www.hmrc.gov.uk/manuals/saimmanual/saim2430.htm

https://www.gov.uk/savings-for-children

FreeBear

xylophone wrote: »

If you invest/ save in your own name then the cash/assets are yours, are taxed as yours and would be taken into account should you ever need means tested benefits.

Not just benefits - The savings would also be at risk if you divorced, were made bankrupt, or died prematurely without a valid will. Much better to set the account up in the child's name and avoid any complications as well as taking advantage of the tax rules.