Savings for Nephew and Niece

rachel90

Hi all,

I want to open a savings account for both my soon to be 4 year old nephew and his soon to be born, sister but I have no idea where to start with it. I'm planning to put £10-£20 per month in each account and for them to receive the money on their 18th? 21st? birthdays. My aunt and uncle did a similar thing for me (NS&I Bonds), which I received on my 18th birthday and I put towards a car and all that comes with buying a car!
I don't want anyone to be able to access the accounts until their big birthday and then of course they're free to do what they like with it although I'd try to encourage them to use it wisely. I've been looking at the Halifax Kids Regular Saver at 4.00% gross/AER however, it mentions having to live at the same address, which I don't. Although I'm not sure if that is just for opening an account online? But then after 12 months it goes to a Young Savers account which is only up until the child's 15th birthday so I'd then need to sort something else out for the next 3-6 years.

Can anyone please advise me on the best thing to do? Obviously, I'd like more interest but I'd prefer to have it all in one place and not have to worry about it all moving around until I choose to give them access to the accounts!

Thank you

xylophone

Does your nephew have a JISA and will one be opened for his sister?

If so, you can contribute. You would need to obtain the details of the account number and sort code from the child's parent (the adult contact).

These are the accounts on which the best interest rates are paid and the money can be accessed only by the child on turning 18.

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

http://www.moneysavingexpert.com/savings/child-savings-tax-free

Keep_pedalling

A JISA would be the ideal place to put this money, They do need to be set up by a parent or guardian but once done you can pay into them and they can't be touched until they are 18.

rachel90

No, he doesn't have anything at present, just a piggy bank!
So I'd need to get my sister (their mum) to open the Junior ISA for each of them and then I can pay into them? I can't open it myself on their behalf?
I've always been put off ISA's so I wasn't even considering them!

xylophone

Only the parent or guardian can open a JISA but once opened, other friends and relatives can contribute.

Rates on adult ISAs are not good, but it is possible to get up to 4% on a JISA - see links above.

bowlhead99

Once you have decided that the Jisa is a sensible way to go (because of it being a modern, tax efficient product with a built-in mechanism to prevent encashment by anyone including the child and parents before age 18)...

Then you can decide whether it makes sense to go for a cash deposit account paying a fixed amount of interest, or a proper investment which grows over the next decade and a half or more. Many of us here would suggest investments (s&s ISA) over cash savings (cash ISA) if the goal is to grow the pot until late teens rather than save for a short term rainy day.

Alternatively, instead of faffing about with small amounts of money per child, if you aren't using up your own personal ISA allowance you could just open your own S&S ISA and put something like £30pm, or £100 a quarter, in that. Then you have absolute control and can keep it growing tax-free until they're 21, or pay out a bit at 18 and a bit at 21, or whatever.

The only downside of investing in your name instead of theirs is that if the money's in your own name and you're trying to get means-tested benefits or escape creditors who are chasing your unpaid debts, they count as your assets and not the kids'. Still, that's not a problem for most.

Gem-gem

My sister opened up a JISA for her son and I transfer £10 a month into it.
I like doing it monthly as you don't miss the small amount.

rachel90

bowlhead99 wrote: »

Once you have decided that the Jisa is a sensible way to go (because of it being a modern, tax efficient product with a built-in mechanism to prevent encashment by anyone including the child and parents before age 18)...

Then you can decide whether it makes sense to go for a cash deposit account paying a fixed amount of interest, or a proper investment which grows over the next decade and a half or more. Many of us here would suggest investments (s&s ISA) over cash savings (cash ISA) if the goal is to grow the pot until late teens rather than save for a short term rainy day.

Alternatively, instead of faffing about with small amounts of money per child, if you aren't using up your own personal ISA allowance you could just open your own S&S ISA and put something like £30pm, or £100 a quarter, in that. Then you have absolute control and can keep it growing tax-free until they're 21, or pay out a bit at 18 and a bit at 21, or whatever.

The only downside of investing in your name instead of theirs is that if the money's in your own name and you're trying to get means-tested benefits or escape creditors who are chasing your unpaid debts, they count as your assets and not the kids'. Still, that's not a problem for most.

I think I definitely want them to both have an account rather than having one in just my name for them to split. I've tried googling about S&S ISA's but I'm not really understanding it very well - I'd have to buy stocks and shares with the money I contribute? Can I still contribute £10-£20pm? Is there a minimum amount you have to have to set the S&S up? Is there a minimum you have to have to start buying stocks and shares? Thank you

xylophone

The parent/guardian must set up any JISA account.

Up to a total of £4080 can be contributed per child in the current tax year.

That can be all in a cash JISA, all in a stocks and shares JISA, or partially in a stocks and shares JISA and partially in a cash JISA.

Perhaps you could get together with the children's parents and discuss the matter.

If by any chance one of them has, or is prepared to open, his or own ISA with the Halifax, this would make the child eligible to open a Halifax cash JISA which pays 4%.

Otherwise, Nationwide offers 3.25%.

The parent would set up the account for each child, give you the sort code and account number and you could set up a standing order from your bank to pay £20 a month into each.

If a stocks and shares option is required, for the modest monthly contribution, some thing like this might suit.

https://affiliate.shepherdsfriendly.co.uk/plans/child-savings/junior-isa#b

https://www.onefamily.com/savings-and-investments/children/junior-isa/


There are other options if larger monthly contributions can be made, perhaps from family members clubbing together etc.