£7.5 investment for child

simone83

Hi,

Looking for advice on best investment for my daughter she currently has £7.5K in a normal savings account. She is 3.

TIA.

PeacefulWaters

Junior ISA. Stocks and shares variety.

£4,080 this tax year and the rest on 6th April.

Note she won't be able to access it until her 18th birthday.

jdw2000

If I had kids I would not give them a bank account or ISA. I would think that they will get to 18 years old and then blow the money on something.

Instead, I would put the money into a pension for them. They can then spend their working life with less pressure on them.

£7.5K invested in a pension now could be almost half a million by the time she retires in 60 years time. And that is without you (or her) adding a penny more to it.

glider3560

jdw2000 wrote: »

If I had kids I would not give them a bank account or ISA. I would think that they will get to 18 years old and then blow the money on something.

It really depends on the child (adult they become).

I beieve that allowing the child to know the money is there, teaching them the habit of saving rather than spending, seeing this habit in their parents and getting them involved in the management of this money won't lead to them blowing the money on something.

Hiding the money from them, then giving it to them on their 18th birthday without any involvement previously will almost certainly lead to the money being blown very quickly.

PeacefulWaters

jdw2000 wrote: »

£7.5K invested in a pension now could be almost half a million by the time she retires in 60 years time. And that is without you (or her) adding a penny more to it.

And what will that £500k be after taking into account inflation?

jdw2000

glider3560 wrote: »

It really depends on the child (adult they become).

I beieve that allowing the child to know the money is there, teaching them the habit of saving rather than spending, seeing this habit in their parents and getting them involved in the management of this money won't lead to them blowing the money on something.

Hiding the money from them, then giving it to them on their 18th birthday without any involvement previously will almost certainly lead to the money being blown very quickly.

All the very best of luck with that approach.

jdw2000

PeacefulWaters wrote: »

And what will that £500k be after taking into account inflation?

I don't know. You tell me!

colsten

jdw2000 wrote: »

£7.5K invested in a pension now could be almost half a million by the time she retires in 60 years time. And that is without you (or her) adding a penny more to it.

That assumes a steady 7% year on year growth which may or may not be realistic. I believe pension schemes these days assume more like 4% annual growth.

Also, £500K in 2076 will buy the same as £148,777 today, assuming a very modest 2% year on year inflation.

I am not against your suggestion of a pension - just need to be conscious of what the assumptions are.

jdw2000

colsten wrote: »

That assumes a steady 7% year on year growth which may or may not be realistic. I believe pension schemes these days assume more like 4% annual growth.

Also, £500K in 2076 will buy the same as £148,777 today, assuming a very modest 2% year on year inflation.

I am not against your suggestion of a pension - just need to be conscious of what the assumptions are.

£148K is amazing. Damn site more than I have at the moment.

Masomnia

If it was me I would want it available in my 20s towards a deposit on a house rather than as part of a pension. I say Junior ISA for that reason.

You have to decide as a parent I suppose!

Eco_Miser

jdw2000 wrote: »

If I had kids I would not give them a bank account or ISA.

That's a great way of not teaching financial responsibility. I had a bank account from age 6. I still have some of that money 60 years later.

jdw2000 wrote: »

I would think that they will get to 18 years old and then blow the money on something.

Like an education perhaps, or a deposit on a home?

jdw2000 wrote: »

Instead, I would put the money into a pension for them. They can then spend their working life with less pressure on them.

Less pressure knowing that they'll have an income when they retire - but can't afford to buy a house now because their money is locked away by a parent who doesn't trust them.