Investing - Child

30andcounting

We have a 7 month old baby and have been putting £50 in an account for him since he was born, we are using the Halifax kids monthly saver paying at 4.5% up to £100 a month fixed for 12 months, the balance then gets dumped into their regular saver paying c2% I think.

The reason we haven't opened an ISA is that I don't like the idea of the money automatically becoming his at 18. Everyone hopes they bring up their kids to be responsible but casting my mind back to when I was 18 I would of probably blown the lot.

Are we doing the right thing and has anyone else got any advice on this subject? We aim to use the money towards any big expenses in the future, first time we touch it is to probably buy his first car and then to gift him a house deposit. Plan is also over time to increase the £50 a month contribution.

Any advise would be welcome from anyone in a similar situation or experience.

Thanks

MallyGirl

I see a lot of people raising your concerns. Maybe I have been lucky but I have always educated my DD about money along the way and she has grown into a sensible and careful girl. Much of her money is in a JISA that she will get in a year's time (she has no idea how much) but some was kept more available and went to her on her 17th birthday for driving lessons. It was gift from her grandparents the day she was born and she is closely monitoring how she uses it.
She got a bank account with a debit card at 11 and her pocket money was paid in there by SO.
You have 17+ years to teach them the right way to live and to manage money.
I grew up in a single parent family on very low income. I knew the value of money from an early age. At 18, just before I went to uni, I was given a passbook that showed my nan had saved for me through my early years. It was enough to get contact lenses and to set me up in the first few month at uni. There was still enough to buy a cheap car later on. It was a brilliant gift and I will never forget opening the passbook and seeing the numbers.

AnotherJoe

An alternative is to put the money in an ISA in your name. Then you can pay it over whenever. If you have multiple investments in your ISA then just pick one that is earmarked as theirs.

30andcounting

I appreciate your thoughts and I hope for the same, I plan to educate my son on all those things, you just never know - which is why I asked the question (and many others have from your response) on what to do to maximise the interest. If we did £50 a month between now and 18 that's £11k without any interest effect, a lot of money. To see it get wasted would be a disaster.

eskbanker

OP, you basically have four options:

1. What you're currently doing, saving in your son's name
2. Investing, e.g. via a Junior ISA, in your son's name (better than saving, over that sort of timescale)
3. Saving or investing in your own name and later gifting him the money
4. Setting up some sort of trust fund to mature at an age of your choosing

The key point is that options 1 and 2 both entail your son having access to his own money when he turns 18.

If you're desperate to retain control of the money yourself beyond that then you need to look at options 3 or 4....

30andcounting

eskbanker wrote: »

OP, you basically have four options:

1. What you're currently doing, saving in your son's name
2. Investing, e.g. via a Junior ISA, in your son's name (better than saving, over that sort of timescale)
3. Saving or investing in your own name and later gifting him the money
4. Setting up some sort of trust fund to mature at an age of your choosing

The key point is that options 1 and 2 both entail your son having access to his own money when he turns 18.

If you're desperate to retain control of the money yourself beyond that then you need to look at options 3 or 4....

Thanks - that was exactly what I was after. a non judgemental viewpoint on my own view point of trying to save for my sons future

xylophone

We have a 7 month old baby and have been putting £50 in an account for him since he was born, we are using the Halifax kids monthly saver paying at 4.5% up to £100 a month fixed for 12 months, the balance then gets dumped into their regular saver paying c2% I think.

You are holding this in "bare trust" for your child and he is therefore the beneficial owner - he has the absolute right to access and control at the age of 18.

You should be aware that if you gift money to your minor unmarried child (outside a tax privileged account like JISA), any interest earned over £100 (applies to each parent separately) while still beneficially owned by the child, is taxed as yours and must be declared to HMRC.

https://www.cii.co.uk/learning-index/articles/investing-for-children-part-2/57447