Investing for child

alfabet

Our daughter is 3.

Currently she has approx. £7k sitting in a Santander 123 Mini account, earning 3% on the first £2k and 0% on the rest Obviously this is not great and we want to get her money doing better for her.

All the money was gifts from grandparents etc. None came from us (parents). We expect there will be more lump sum gifts in future, e.g. at birthdays.

I have looked at Junior ISAs but the money is locked up until she is 18. I think it is possible she may want to access some of it (with our approval) in her teenage years. Maybe a first car at 17, who knows.

Given the timeframe of up to 15 years, investing seems a good option. I have been investigating bare trusts:

AJ Bell - "Dealing account for children"
Hargreaves Lansdown - "Junior Investment Account"

What do people think about these options? Is there anything else we should consider?

Neil_Jones

https://www.moneysavingexpert.com/savings/child-savings-tax-free are another couple of options for saving that don't require locking it away for 15 years.

AnotherJoe

Or JISA, and loan her the money if she needs it a year or two earlier.

cloud_dog

alfabet wrote: »

Our daughter is 3.

Currently she has approx. £7k sitting in a Santander 123 Mini account, earning 3% on the first £2k and 0% on the rest Obviously this is not great and we want to get her money doing better for her.

All the money was gifts from grandparents etc. None came from us (parents). We expect there will be more lump sum gifts in future, e.g. at birthdays.

I have looked at Junior ISAs but the money is locked up until she is 18. I think it is possible she may want to access some of it (with our approval) in her teenage years. Maybe a first car at 17, who knows.

Given the timeframe of up to 15 years, investing seems a good option. I have been investigating bare trusts:

AJ Bell - "Dealing account for children"
Hargreaves Lansdown - "Junior Investment Account"

What do people think about these options? Is there anything else we should consider?

Why not do a bit of both but utilise the S&S JISA and other accounts (investment and or savings). My DD has S&S JISA and a savings account in her name, and we have accounts in our name(s) with savings and investments.

leviathan

alfabet wrote: »

I think it is possible she may want to access some of it (with our approval) in her teenage years.

My understanding is that you must hold it in trust if you want any control.
Premium bonds, bank accounts, kids ISA's all belong to the child and at the age of maturity you have no say legally on what they do with the money.


Thus for our kids we invest in our own names and will give them money if and when they are mature enough to accept the gift, otherwise they wont get it. We remain 100% in control in case god forbid they turn out to be utter ***** in their teenage years.

Malthusian

As she is £7k tax on income and gains is not an issue for her, so the only advantage of a Junior ISA is the automatic conversion to an adult ISA without needing to use your adult ISA allowance. And that is miniscule given the amounts we are talking about.

If she invests sensibly in stocks and shares over a 14-year-time frame and doesn't beat cash over that period, then that suggests Extinction Rebellion won (because they succeeded in engineering a permanent global economic depression), and she won't be allowed to buy a private car anyway.

jeepjunkie wrote: »

+1 for stocks and shares isa but also consider cycling money through Halifax 4% regular saver. Sadly there is just not the cash based returns my daughter benefited from anymore.

Because happily there is not the level of inflation and interest rates that we saw before, which is highly likely to benefit your daughter as she will probably have many decades of borrowing money ahead of her before she accumulates enough wealth for lower interest rates to turn into a problem and not an opportunity.

xylophone

There seems no reason why she can't have both JISA and non JISA accounts.

https://moneytothemasses.com/quick-savings/parents/best-junior-stocks-and-shares-isa

dai_bach

leviathan wrote: »

My understanding is that you must hold it in trust if you want any control.
Premium bonds, bank accounts, kids ISA's all belong to the child and at the age of maturity you have no say legally on what they do with the money.


Thus for our kids we invest in our own names and will give them money if and when they are mature enough to accept the gift, otherwise they wont get it. We remain 100% in control in case god forbid they turn out to be utter ***** in their teenage years.

+1 we do this also. We are no where near hitting our annual ISA limit so this seems like a good option to us.

alfabet

Thank you all for your replies - very helpful.