SAVING REGULARLY FOR OUR GRANDCHILDREN'S 18TH BIRTHDAYS

EstrellaAzul

Hi, I have started saving monthly for our grandchildren's 18th birthdays and plan to give them each £18000.  They are currently 5, 3 and one on the way.
Can anyone please advise if there will be a problem for us gifting this money via cheque or bank transfer to their accounts when they are 18?  

eskbanker

Not necessarily a problem as such but if you're saving in your name rather than theirs, such gifts would be considered as part of your estate, and potentially subject to inheritance tax, in the unfortunate event of your death within seven years after gifting.  This could be avoided if you save via accounts in their names - junior ISAs would sound ideal, although they'd need to be opened by the parents....

EstrellaAzul

I had thought perhaps inheritance tax, how much is it currently?  Looked at junior ISAs and similar but as they involve their parents, decided to save in my name unfortunately at very low interest!   

eskbanker

EstrellaAzul said:

I had thought perhaps inheritance tax, how much is it currently?

See https://www.gov.uk/inheritance-tax/gifts

EstrellaAzul said:

Looked at junior ISAs and similar but as they involve their parents, decided to save in my name unfortunately at very low interest!   

Have you considered investing instead?  Saving in cash deposit form is highly likely to lose real-terms value to inflation over the long term....

EstrellaAzul

No I thought perhaps I could lose money? I would not know where to start as I have only ever saved in ISA's and building societies.  

xylophone

 Looked at junior ISAs and similar but as they involve their parents, decided to save in my name unfortunately at very low interest!   

But only the child will be able to access the money (at 18).

https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

EstrellaAzul

It is not the problem of who will access just that I did not want to tell the parents we are saving a sum for their children's 18th.  I think with all junior accounts, the parents may have to be involved?

MX5huggy

EstrellaAzul said:

No I thought perhaps I could lose money? I would not know where to start as I have only ever saved in ISA's and building societies.  

You could lose money, but are you likely to lose money? Over 18 years or even 13 for the oldest one. Investing will beat savings most of the time (probably all the time), you chose a fund that matches you attitude to risk, the fund invests in a wide range of assets (shares, bonds, gilts, property, etc) to spread the risk. If you put £80 a month or £1000 per year away for them then you are immediately spreading the risk because you avoid investing at the top of the market where ever that may be.

DiamondLil

I save / invest for my grandchildren; I opened accounts in my name, each one designated to a particular grandchild, with Charles Stanley Direct. I save the cash elsewhere and invest it when it's cost effective to do so. I am old enough to know that £18000 will buy less in 18 years time than it does today. So either way, save or invest, there is a risk involved.

jimjames

EstrellaAzul said:

No I thought perhaps I could lose money? I would not know where to start as I have only ever saved in ISA's and building societies.  

If you are investing over a 10 year plus period and putting in money regularly then if the stock market drops at one point then that's a good thing as you'll buy more with your money for the months that it's lower. It's counterintuitive to want to buy at higher prices but it's incredibly unlikely over a 10 year period that you would have less money than you started with. It's pretty much impossible for you to lose everything if you have invested in a balanced fund.

AnotherJoe

EstrellaAzul said:

I had thought perhaps inheritance tax, how much is it currently?  Looked at junior ISAs and similar but as they involve their parents, decided to save in my name unfortunately at very low interest!   

You should be investing rather than saving. Over the 15 or so years for them  it's a virtual certainty that investing would produce much better returns.