Godchild/Godson Savings

maccahynes

Afternoon all,


I was hoping to set up an account to purchase some premium bonds on behalf of my godson (I´m aware that this isn´t the best in terms of returns). I have now found out in order to do so, I would need to be his parent or grandparent which clearly I am not.

Can anybody recommend where I can invest on his behalf for his future?

Thanks

xylophone

Does your godchild have a JISA? Once his parents have opened one for him you could contribute.

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

DairyQueen

I had the same issue when looking to invest for my nephews. After five years of mucking about with the complex admin imposed by cash savings a/cs (because I am not their parent) I turned to the stock market.

For various reasons I wanted to retain control of the fund (not all parents are good money managers) so I decided to use part of my own annual ISA allowance.to invest on behalf of the children. I have ring-fenced specific investments in my ISA that 'belong' to the children. They will inherit this part of the ISA in the event of my death. If I survive until the youngest is 18 then I will sell/withdraw the ring-fenced investments and hand over the cash.

A JISA is an option but the disadvantage (for me) is that the account/investments are controlled by the parents. Also, given the timescale over which I was investing (15 years by the time I moved the cash into shares), the stock market made much more sense.

Their money is invested in low-cost trackers and has enjoyed much better returns in the 5 years since I began investing it this way. Yes, the money is at risk but if you are looking to invest over a longish period for your godson then the stock market is definitely worth considering.

AnotherJoe

I have done exactly the same as DairyQueen, I have some ring fenced funds which the intention is either to give to child at suitable age or via will.
Main benefits are
-Not locked into child having money at exactly 18
-I can control the investments
-Being pessimistic not even locked into giving to the child it may be that when they are 18 they have gone off the rails and giving them the money then would be counterproductive.

DairyQueen

AnotherJoe wrote: »

it may be that when they are 18 they have gone off the rails and giving them the money then would be counterproductive.

I forgot to mention that one

Malthusian

Have you already maxed out Premium Bonds in your own name? If not there is little reason not to buy them in your own name, as they are tax-free. (There is is one - Inheritance Tax.)

As others have said, assuming this is a relatively recent christening, it would make far more sense to invest in stocks and shares given the money is unlikely to be accessed until the child is 18, or later.

However, given that this is a godson and not the OP's flesh and blood, they may only have been thinking of investing a very small amount and opening a stocks and shares account would not be worth the hassle or the fees.

AnotherJoe

There’s another potential issue with PBs if you have more than one child you are investing for, suppose you buy £100 each and one of them wins a really big prize say £20k or up. Now when they are 18 the kid get very different outcomes. If the prize comes to you then you can equalize it between them with no arguments.

planteria

i set up a JISA for my newborn son a year ago, and it has the facility for other people to add gifts to it, along with a message, and to select what the money should be used for, from various categories too.
alongside, i have set up a TESP with a friendly society for him. i invest £25/m into this, for the long term.
also opened a cash savings account for him with a building society.