Long Term Saving for Children - WDYD?

Lokolo

So it is coming up to my sons first birthday and a couple of people have said about giving some cash. Am interest in what others do.

So yes, a savings account/junior ISA seems to be a great idea.

- Long term rules out cash
- If you have multiple children, even with the same deposits, the performance could differ because of when money is deposited
- When 18, one child could have more than others because of the above
- Cheques would be in our sons name, so would need to be deposited in an account with his name

My initial thoughts are to put it all in one account in mine or my partners name (we have spare ISA allowance), and at least this way we can decide nearer the age when they would get the money, we can be fair, but things such as cheques would be in the childs name and therefore would need to be deposited in an account with his name.

What do you all do?

Boleyn19

We have had the same issues. We've put money aside for them which gains interest at the same rate. We opened child accounts for cheques made out to them with the same bank and same interest rate. However my Dad set up a unit trust (in our names) for our elder child and a CTF (in his name) with a different provider for our second. The CTF has done significantly better. Now the CTF has been transferred to a JISA for the younger (aged 15). The UT has been transferred to an ISA in his name for the elder (aged 19) and I have given him the difference. So they are now equal. The difference was c £1600.

Keep_pedalling

The money they have been gifted is theirs so it would be wrong to put an account in your name. Yes a S&S JISA will give different result over different rims periods, but I don’t see why that is a problem especially if you start to educate them as to the value of long term investments well before they reach 18, so they are less likely to cash them out immediately.

We have 2 grandchildren aged 1 and 2, and we have funded JISAs for both of them and top them up each birthday.

xylophone

If money has been given to your child it is his money - it should be deposited in an account in his name.

If you and your wife wish to save for your children from your own resources and do not wish to gift before you feel they are ready, then use your ISA allowances for your own money and gift at the time you think is appropriate.

Zorillo

I have twins. We save their child benefit for them (we equalise it, anything else would be unfair), and invest it annually in VLS100 within a JISA. So far the balances are identical.

In the event of a third, we'd do the same. If approaching adulthood there was going to be a marked difference in outcomes, I'd try to balance it out using my own money as I saw fit.

Lokolo

Thanks. I think the idea from Zorillo and Boleyn makes sense and topping it up to match when the age comes so that it is fair.

Keep_pedalling wrote: »

Yes a S&S JISA will give different result over different rims periods, but I don’t see why that is a problem especially if you start to educate them as to the value of long term investments well before they reach 18, so they are less likely to cash them out immediately.

It's nothing to do with them having the money. Its the fact our second child will likely be 2+ years different. In those 2 years, there could be significant monetary differences. And it wouldn't be fair to give a child more money over the other due to market conditions. The money would still be there's. But administratively if it was in one of our ISAs, we can split the pot when the time comes, rather than having Child A Account with £x and Child B Account with £y.

jaybeetoo

If it were me, I would not keep the money in savings accounts. I’d invest it. You’ve got 17 years for the money to grow and should ride out any dips.

AnotherJoe

How much are you talking about here Lokolo?

Lokolo

AnotherJoe wrote: »

How much are you talking about here Lokolo?

Mum and Dad around £100 a month to start, once we have the wedding out of the way and second child at school we will increase this (for both)

I suspect grandparents will give gifts up to £500 on birthday.

With these amounts we could be looking at around £30,000 at 18, and the difference between the children could be a couple of thousand, which wouldn't be an issue if we were to top one up to equal the other.

jaybeetoo wrote: »

If it were me, I would not keep the money in savings accounts. I’d invest it. You’ve got 17 years for the money to grow and should ride out any dips.

Yes, it will be a JISA. However most of my partners family will likely give cheques. I will be checking with CSD tomorrow as to whether we would be able to deposit cheques with them, otherwise it means opening a bank account and transferring across (not an issue but wanting to limit the administrative side).

Keep_pedalling

Lokolo wrote: »

Mum and Dad around £100 a month to start, once we have the wedding out of the way and second child at school we will increase this (for both)

I suspect grandparents will give gifts up to £500 on birthday.

With these amounts we could be looking at around £30,000 at 18, and the difference between the children could be a couple of thousand, which wouldn't be an issue if we were to top one up to equal the other.



Yes, it will be a JISA. However most of my partners family will likely give cheques. I will be checking with CSD tomorrow as to whether we would be able to deposit cheques with them, otherwise it means opening a bank account and transferring across (not an issue but wanting to limit the administrative side).

From CSD FAQs on the website

Can I open a Junior ISA for a grandchild?

No, all Junior ISAs must be opened by one of the parents or legal guardians of the child. However, you can pay into an existing account by contacting the Helpdesk on 0131 550 1234 or by email to info@cs-d.co.uk to arrange that we send you a Third Party Contribution form. You should then return this form with a personal cheque to our Edinburgh office.

So it looks like there is no problem with cheques from 3rd parties.

LHW99

The money would still be there's. But administratively if it was in one of our ISAs, we can split the pot when the time comes, rather than having Child A Account with £x and Child B Account with £y.

But they will be different ages, so one is likely to want / get control of the money before the other. IMO Zorillo's approach tackles that by equalising at the point of them getting control.