Investment idea for a 3 year old

SurfacePro

Hello all,
Please any idea on the best investment that I can make for my three year old. I want to put away £80 per month for the next 18 years. Not sure if junior ISA will suffice as I don’t want my kid to blow it as soon they are 18. Is it worth putting in a trust fund etc. Any ideas will be great.

xylophone

Unless in a discretionary trust (expensive to set up and administer), the child would have the right to access and control at 18.

You could use an investment trust with designation (not bare trust) - this would mark the investment as intended for the child if and when you wish.

The investment remains your and taxed as yours and if you wished it to go to the child after your death you would need to make a specific bequest in your will.

Example

https://www.bailliegifford.com/en/uk/individual-investors/how-to-invest/childrens-savings-plan/

SurfacePro

Thanks. That seems like a lot work and hassle. At the moment it may just be junior ISA or pension or both.

AnotherJoe

Just put it it in a designated fund in your own name that way you have control. Any cheap global tracker.

foofi22

AnotherJoe wrote: »

Just put it it in a designated fund in your own name that way you have control. Any cheap global tracker.

This is exactly what I've done

HappyHarry

SurfacePro wrote: »

Thanks. That seems like a lot work and hassle. At the moment it may just be junior ISA or pension or both.

Pension? Your three year old will have to wait more than 50 years to access it.


Why open an investment that doesn't meet your objectives? regardless of how much hassle, it's just pointless.



In any case, opening an investment with a designation is easier than opening a Junior ISA. You don't need the child's birth certificate for one.

Wesley_Donnelly

I opened my then 4yr old a Junior ISA last April with Cavendish Online at an annual fee of 0.37% which included the fund Fidelity index world P.
I plan to fully subscribe again in the new tax year but am considering whether to change the above to Hsbc FTSE all world at an overall cost of 0.41% because this also includes emerging markets.
Good luck.

xylophone

It is not difficult to open an account with a designation.

https://www.hl.co.uk/investment-services/investing-for-children/junior-investment-account/open-a-junior-investment-account

SurfacePro

Sorry what is a designated account

SurfacePro

If I did I think there will be taxes to pay

Reaper

SurfacePro wrote: »

Sorry what is a designated account

Nothing much. It means you open your an account yourself with the intention of gifting it to the named child in the future. Maybe. If you feel like it.

SurfacePro wrote: »

If I did I think there will be taxes to pay

Yes, because it remains your money not the child's until you feel like gifting it. If you do.

It's very easy to arrange investments to be free of tax (JISA and normally Bare Trusts) but very hard to get them to continue past 18 without the child being able to surrender them. Possibly (and very contentiously) you could continue a Bare Trust past 18 by being a trustee and simply ignoring your duty to release the investment to the child. The company won't hand the money over to the child without the agreement of the trustees.