New baby: Is a SIPP the correct option?

buel10

Hi all,
My wife and I are lucky enough to have a 4 week old baby girl. Friends and relatives have been so lovely and have provided presents and cash for the little one. However, I am very aware at how easy it is to use the money on baby stuff, etc so we have thought about putting it away in a bank account for the little one......but I remember reading an article about how investing in a pension for a baby as early as possible would likely reap so much over the years that I am interested in this.
My question - is a SIPP the correct option, and is there a minimum contribution?

Thank you all.

BoGoF

Problem with that plan is that you are locking that money away until she is at least 55.

buel10

BoGoF wrote: »

Problem with that plan is that you are locking that money away until she is at least 55.

I don't see that as a 'problem' at all. I am aware of that.
However, I would appreciate some help with my queries?

AnotherJoe

I'd say a far better financial option is to save towards education or a house.

"mum, now I've started to work, if i only had enough money for a deposit i could afford a house and stop wasting money on rent, which is so expensive its really hard to save for a deposit. Catch 22"

"dont worry darling, thanks to my foresight, in 40 years time you'll be grateful i've saved enough for you that you can afford rent in your retirement"

buel10

AnotherJoe wrote: »

I'd say a far better financial option is to save towards education or a house.

"mum, now I've started to work, if i only had enough money for a deposit i could afford a house and stop wasting money on rent, which is so expensive its really hard to save for a deposit. Catch 22"

"dont worry darling, thanks to my foresight, in 40 years time you'll be grateful i've saved enough for you that you can afford rent in your retirement"

Again, I appreciate your comments. However, perhaps I should explain myself further - my 'aim' is to split any gifts of cash we receive, hopefully 50/50 with savings and pension.
So, back to my original question, can anyone help advise?
Thank you again, all!

BoGoF

As long as you are aware of that and the fact the pensions legislation could change a lot between now and then. As things stand the max you can pay is £2880 net which after tax relief is £3600 per yeat.

buel10

BoGoF wrote: »

As long as you are aware of that and the fact the pensions legislation could change a lot between now and then. As things stand the max you can pay is £2880 net which after tax relief is £3600 per yeat.

Thank you for that. That tax relief sure is a bonus.
So is there a minimum contribution one can make / is there a set period, ie - monthly?

ruperts

In a similar situation and have pretty much decided not to invest in any account in my child's name. Instead I'm adding a bit to my pension and to my S&S ISA which is virtually ringfenced as their money. I'll give the money to them as and when they need it for things like a house deposit or education. The benefits of long term compounding are still present regardless of whose name the account is in, i'm not in danger of going over ISA or pension contribution limits, so doing it this way seems to have all the advantages of putting it in their name while also giving me a lot more control over how and when they get the money. The only issue I can see is possibly having to skirt around tax on gifts, but I don't expect the amounts given to be extremely high so that shouldn't be too much of a problem.

BoGoF

@ruperts - but it's not ring fenced though is it. What would happen upon your death or divorce for example.

AnotherJoe

This is why they invented wills. I'm doing the same as ruperts for granddaughter.

For divorce, as long as he is happy to split off that portion (and if partner if of same mind then unless its really acrimonious would they deprive their own child?) then same thing applies.

want_to_save

check with the sipp provider, maybe a better option to start is with a stakeholder pension where the minimum is £20