Child Savings

willas00

Hey,

When it comes to savings, ISAs etc I don’t really have much of a clue. I’ve never had the ability to save and me personally I’m in debt but with StepChange under a DMP to get my life on track. So please be a little understanding if you can.

I’m just after some help/advice. Me and my partner have a 10 month old daughter, my grandmother passed away recently and has left my daughter £500. I want to be able to save it for her and of course earn some interest for when she’s older. Once I’m on the straight and narrow with my own finances and finished with my DMP I want to be able to put a small regular amount away for her too. My partner also wants to add funds monthly. Nothing big just a small amount.

What is our best options to help save for our daughters future?

xylophone

How about a Junior ISA?
https://www.gov.uk/junior-individual-savings-accounts

Coventry BS offers 2.95%  on cash
https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

Or you might  wish to consider stocks and shares.

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

Alexland

Bit worrying that 3rd link considers Wealthify to be their best S&S JISA provider with 'low' charges adding up to 0.82% ouch. Ok you can start with £1 but with £25 pm you could have a Fidelity S&S JISA with no ongoing platform fee and a good choice of funds.

Speculator

Very impressed with Coventry. Sent daughters Junior ISA application with cheque and CTF transfer form on Friday 23 Oct.  Account opened on Mon 26 Oct. By Thursday 29th Oct, transfer completed and CTF funds from Chorley BS deposited in my daughter's Coventry Junior ISA. The whole process took only 1 week!

Compare this to when I transferred my other daughter's CTF from Skipton to NSI Junior ISA in May. The whole process took 75 days from start to finish!

Another_Saver

2.95% on cash isn't bad while it lasts, but if your daughter's got 17 years to go before she can access the money then a junior stocks & shares ISA seems worth taking the risk. 17 years is a decent chunk of time to let the stock market do its thing and even out the crashes along the way.
It's a personal decision about whether to go with a safe cash account (JtOSA, children's savings accounts) or an investment, i.e. S&S JISA. There's no right or wrong way to do this, saving money is good either way, and the the rates on children's accounts are much more favourable than what adults can get. Suggestions have been provided above already. It's unlikely to make a huge difference. If you save £500 a year for 17 years at 3% that's £11k at the end (in today's money, not counting inflation), if you can keep on getting 3% for 17 years). £500 a year for 17 years at stock market average 7% turns into £15k, again not counting inflation. that's not guaranteed and for that much "extra" potential "profit" maybe you'd rather stick with the safety of cash.

I think for the amount you're looking at saving/investing, https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa may be the cheapest S&S JISA.
Aa for a fund choice, for that amount, just buying Vanguard FTSE global all cap is fine.
They are very accommodating with smaller amounts and the customer service is good if you need help navigating the website. Other S&S JISA suggestions have been provided in previous comments to save me detailing any further options.

A few general pointers:
1. Using the money for uni tuition fees would probably be a waste.
2. I agree about paying off "bad debt" before investing.
3. Investing time/effort in your daughter's financial education (and what you're doing right now is setting an excellent example so it seems like you're already onto this) to make sure she doesn't blow it on an 18th birthday party or whatever girls will spend their money on in the late 2030s, will pay far higher returns than any gift or financial investment so definitely keep it up. Martin Lewis has sponsored a financial education text book targeted at Key Stage 4 (https://www.young-enterprise.org.uk/resources/your-money-matters-financial-education-textbook/)

 If I sound patronising saying any of this, it's because I used to be a teacher before I saw sense and escaped to the world of finance.

cloud_dog

Another_Saver said:

I think for the amount you're looking at saving/investing, https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa may be the cheapest S&S JISA.
Aa for a fund choice, for that amount, just buying Vanguard FTSE global all cap is fine.
They are very accommodating with smaller amounts and the customer service is good if you need help navigating the website. Other S&S JISA suggestions have been provided in previous comments to save me detailing any further options.

OP,  just to comment that if you choose to go down the investment route, I would echo @Alexland recommendation of using Fidelity.  Whilst Vanguard are very competitive in the market across most things Fidelity do not apply a platform fee for the JISA and you can invest monthly from £25pm.

Alexland

cloud_dog said:

OP,  just to comment that if you choose to go down the investment route, I would echo @Alexland recommendation of using Fidelity.  Whilst Vanguard are very competitive in the market across most things Fidelity do not apply a platform fee for the JISA and you can invest monthly from £25pm.

Also on Fidelity you would have access to cheaper multi asset or index tracker funds than being restricted to only those Vanguard offer. Normaly on other types of account wrappers you would have to pay Fidelity more than Vanguard for this wider market choice but on the JISA it's amazing they are now willing to run the accounts for free.

Another_Saver

cloud_dog said:

Another_Saver said:

I think for the amount you're looking at saving/investing, https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa may be the cheapest S&S JISA.
Aa for a fund choice, for that amount, just buying Vanguard FTSE global all cap is fine.
They are very accommodating with smaller amounts and the customer service is good if you need help navigating the website. Other S&S JISA suggestions have been provided in previous comments to save me detailing any further options.

OP,  just to comment that if you choose to go down the investment route, I would echo @Alexland recommendation of using Fidelity.  Whilst Vanguard are very competitive in the market across most things Fidelity do not apply a platform fee for the JISA and you can invest monthly from £25pm.

Alexland said:

cloud_dog said:

OP,  just to comment that if you choose to go down the investment route, I would echo @Alexland recommendation of using Fidelity.  Whilst Vanguard are very competitive in the market across most things Fidelity do not apply a platform fee for the JISA and you can invest monthly from £25pm.

Also on Fidelity you would have access to cheaper multi asset or index tracker funds than being restricted to only those Vanguard offer. Normaly on other types of account wrappers you would have to pay Fidelity more than Vanguard for this wider market choice but on the JISA it's amazing they are now willing to run the accounts for free.

Every day's a school day 🤷‍♂️

Alexland

Another_Saver said:

Every day's a school day 🤷‍♂️

Fidelity are almost running our adult SIPP accounts for free too as the capping on exchange traded assets means we are paying around 0.02% platform fee compared to their headline rate of 0.35%. As part of their purchase of the L&G retail business they are moving our small L&G ISAs across in the next year (we need to hold them for 2 years under the cashback offer) and they promised the total Fidelity platform + L&G fund charge will be no more than we are currently paying but I expect it will be less as we get the reduced 0.20% rate for holding funds. Once on Fidelity we should be able to switch the fund from L&G to the HSBC one we hold on iWeb ready for transfer-out without trade fees when the 2 years is up