Best way to invest childrens money

spdavies

Hi all,
I'd appreciate your help and views please.


I have three kids age 9,7 and 3.


They each have savings approx. as follows and their current 'lock-in' deal has matured.


9yr old - £10,000
8yr old - £8,000
3yr old - £1,000


The money is made up of a mixture of Family gifts, trust bonds and regular payments (~£20 p/mth each).


I am now looking at where/how to best invest the monies next that:
- Gives us a good return with some withdrawal flexibility (not necessarily on all the monies but on some)
- Avoids paying any unnecessary tax (if our total interest per child exceeds £200 then I was planning to set them up in my wife's name as she earns below the min earnings threshold - is this a sound planning assumption??)
- Does not lock us in for the long term i.e. to a junior ISA.


Thoughts, suggestions, advice all welcome please.


Thanks
Stuart

xylophone

If this money represents unconditional gifts made to each child then it belongs to each child individually - it is not "family" money.

With regard to the so called "£100 rule", this applies to interest arising on money gifted by parents ( except in tax privileged accounts such as JISA) - this is why it is advisable for gifts from parents to be held in an account separate from that holding gifts from other people (unless all the money is in a JISA where the source of the gifts is irrelevant).

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

You or you wife can hold children's accounts ( or other accounts as permitted by the provider) in bare trust for each child - be aware that the child has the absolute right to access and control at the age of 18 (16 in Scotland).

Is the cash to be saved or invested?

spdavies

Thanks xylophone.
Sorry I'm not sure what you mean by saved or invested? They have the money now and I want it to grow over the years but I also want to have the flexibility to be able to access it a couple of times a year for large investments, holidays etc..


Just to be clear then in terms of what is meant by unconditional gifts please (sorry please bear with me) Which do these fall under and would they constitute part of the £100 allowance?
- £20 regular payments from us to the kids?
- Birthday/xmas gifts?


In terms of putting the account in my wifes name. My question was whether it would make any difference in who sets it up for them (me or her) as she pays no tax and I am higher rate?


Thanks
Stuart

AndyT678

spdavies wrote: »

Thanks xylophone.
Sorry I'm not sure what you mean by saved or invested? ... I also want to have the flexibility to be able to access it a couple of times a year for large investments, holidays etc..

Saved = put in a bank account to earn interest.

Invested = used to buy a productive asset with the hope of future wealth creation e.g. shares in companies.

Holiday = expenditure not investment. See definition above.

xylophone

The gifts from you and other family members are presumably presents to your children that come without any conditions ( must be used for school fees/ must be given back if granny needs the money/ must only be used for the purchase of a house/ etc etc).

The way interest arising on gifts from parents/others is different - see above.

The fact that the money belongs to your children as individuals prevents ( or should prevent) your using it for family holidays/repairing the roof/ reducing the mortgage etc.

The money belongs to each child and should only be used for his individual benefit.

With regard to saving or investment, you can see this as the difference between depositing the child's money in a bank or building society account
and purchasing shares in companies or investment trusts or units in OEICs etc.

spdavies

Ok thanks guys!!

I'll be honest i'm still non the wiser on where best to invest to meet my original criteria of some flexibility, good interest rate without paying unnecessary tax so can i ask the question in a slightly different way.


for one child (with £10k) i was looking at putting say 9k into the halifax young saver account locked in for a year at ~4%) and leaving the remaining 1% in an account where we can still access it a bit more easily.

Does this seem a sound approach to meeting the above criteria?

Thanks

SevenOfNine

spdavies wrote: »

Ok thanks guys!!
for one child (with £10k) i was looking at putting say 9k into the halifax young saver account locked in for a year at ~4%) and leaving the remaining 1% in an account where we can still access it a bit more easily.

Does this seem a sound approach to meeting the above criteria?

Thanks

Not with Halifax. Their Regular Saver pays 4% but you can't stick £9k in it in one hit, only at the rate of £100 per month max (by SO).

Their Young Saver is paying 2.25% at the moment, not 4%!

nearlyretired2004

Still think from some of the wording in your posts (e.g. 'we' can access it ....) that you may be missing the point made quite clearly in an earlier post.

The money belongs to THE CHILDREN and CAN NOT be used for things such as (as quoted before...) family holidays or mending the roof......

Westie983

The difficulty you will find is to find a fixed interest that allows access.

As others have said you either save for your children but its their money to do what they want with at the age of 16/18 (account dependant) or you save in your name and earmark the money to be used for your children.

If you want access to withdraw or credit regularly then you probably wont find a fixed rate of interest or a high percentage.

Think you need to think which direction you want, so posters can help with accounts,