Saving for a child – advice sought

Alexland

bpk101 said:

However i'm a complete novice to this sort of thing and my OH wants the account set up before his birthday (2 weeks time). I've done a preliminary bit of research into S&S ISA's but it all feels quite overwhelming.

Am i best to find an IFA to help me set up and manage the funds or is this something people tend to do themselves?

It's generally not economic to buy advice on child accounts although if you are contirbuting £200 pm it might almost grow big enough eventually. To maintain control consider investing some/all of it in your own names with adult S&S ISA(s) held with someone like Vanguard who are cheap at 0.15% platform fee although only offer their own investements which are also good value.

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

As mentioned above Fidelity have an excellent offer on S&S Junior ISAs where they offer access to a wide range of fund managers and charge no platform fee (or trade fee if sticking to standard funds) until it matures into an ISA at age 18 (when it can be freely transferred to another platform who might be cheaper for adult accounts). You would only incur the fund manager costs for whichever fund you select.

https://www.fidelity.co.uk/junior-isa/

See below link for a good list of good multi asset funds - many of which will be available via Fidelity.

https://monevator.com/passive-fund-of-funds-the-rivals/

Or failing that you could consider using a target date fund such as Vanguard Target Retirement 2035 or 2040. Ignore the word retirement it just means that it reduces (but does not eliminate) stock market risk automatically as the date of withdrawal approaches.

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BZ6VJH11-vanguard-target-retirement-2035-fund-acc

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BZ6VK781-vanguard-target-retirement-2040-fund-acc

Our young kids accounts are with Fidelity and their JISAs are currently invested in HSBC FTSE All World (0.13%) and their SIPPs are currently invested in Vanguard FTSE Global All Cap (0.23%). These are similar and have the potential to drop around 50% in a market crash before hopefully recovering. I will in future derisk manually although might not still be alive to see them access the pensions! Still we keep the majority of the money in our names via adult S&S ISAs and expect they will get at least £20k each at age 18 which will be a good test of what they might do with it. Even that is probably too much but our eldest's JISA investments have done better than expected when we contributed the money so no going back now.

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BD3RZ582-Vanguard-FTSE-Global-All-Cap-Index-Fund-GBP-Acc

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BMJJJF91-hsbc-ftse-all-world-index-c-acc

Alex

foofi22

We just pay money for my daughter into my S&S ISA.  Her money is invested in a different fund (HSBC FTSE All-World) so it keeps the investment separate to mine.  This option was attractive to us due to its simplicity (no need to setup a new account etc.) 

I suggest you at least start saving somewhere whilst you consider your options, time passes quickly; before you know it a year or two has passed!

There is no "correct" amount to contribute - just whatever is affordable for you. In our case we just pay our child benefit into the above fund each month.

Also, note that the S&S ISA does not necessarily mean it is "risky".  The investments inside it will define the level of risk.  The S&S ISA is simply a wrapper meaning the account is free from tax and can investment in a variety of assets.  The "Junior" part just means it belongs to the child and they gain control at 18.  Again the level of risk is defined by the selected investments.

We also have a separate Junior Cash ISA in her name for family gifts (specifically cheques) to be paid into.  I'm trying to find a S&S provider that will accept cheques paid out to her (and not the provider!)

bpk101

Alexland said:

It's generally not economic to buy advice on child accounts although if you are contirbuting £200 pm it might almost grow big enough eventually. 

£200 a month is exactly what we had in mind actually.

Alexland

bpk101 said:

£200 a month is exactly what we had in mind actually.

Yes although I am not a mind reader - you mentioned it in your top post: -)

Another option if you find this all too hard is to just open adult or junior ISAs with a robo advisor like Nutmeg who will ask you a few simple questions but it will cost you more than picking good value investments with Fidelity, Vanguard, etc but less than paying an advisor on a small account valuation. They often run cashback signup incentives with Topcashback, Quidco, etc.

https://www.nutmeg.com/isas

https://www.nutmeg.com/junior-isa

bpk101

Alexland said:

bpk101 said:

£200 a month is exactly what we had in mind actually.

Another option if you find this all too hard is to just open adult or junior ISAs with a robo advisor like Nutmeg who will ask you a few simple questions but it will cost you more than picking good value investments with Fidelity, Vanguard, etc but less than paying an advisor on a small account valuation. 

How does Nutmeg differ from choosing one of Vanguards 'ready-made' portfolio products such as LifeStrategy in terms of it being easier? From what i understand, the LifeStrategy product is also managed for you.  

Alexland

bpk101 said:

How does Nutmeg differ from choosing one of Vanguards 'ready-made' portfolio products such as LifeStrategy in terms of it being easier? From what i understand, the LifeStrategy product is also managed for you. 

The user interface on the Nutmeg website is simpler but it's hardly rocket science to do it yourself with Vanguard (for an adult ISA at 0.15% platform charge) or Fidelity (for a Junior ISA at no platform charge) and on either platform you could invest in a Vanguard LifeStrategy fund with a 0.22% ongoing fund charge. With a DIY product there is the concept of the S&S ISA having a cash balance to make investment choices with and pay ongoing platform fees (if applicable) whereas with Nutmeg you just add the money and they sort all that out. For a simple fixed allocation portfolio Nutmeg charge 0.45% plus a cost of 0.19% for their choice of investments each year so more expensive than DIY but a bit easier if that matters to you. Personally I would rather pay less.

Nurse2047

Sorry to jump on this tread but currently transferring JISAs from vanguard to fidelity- can anyone explain 

• Simple charge of £10.00 for each deal placed online?will this be charged for my monthly DD or certain funds? 

Alexland

The £10 trade charge is for exchange traded assets like company shares, investment trusts or ETFs. There are no trade charges if you stick to traditional OEIC funds.

anxiousnow

Just personal experience and not advice, my children's Vanguard S&S JISAs are performing brilliantly compared with current interest rates. Other than that, for non stocks and shares savings, the Halifax kids' monthly saver (max £100 per month) at 3.5% is pretty good.