Money Moral Dilemma: Is it wrong to invest my children's savings in a property for them?

MSE_Kelvin MSE Staff Posts: 320
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MSE Staff
edited 11 April at 1:01PM in MoneySaving dads
This week's MoneySaver who wants advice asks...

I have two kids who each have a child savings account, and I've saved a total of £10,000 for them. I have three buy-to-let properties, and am thinking about investing their money in a fourth, as it will work it harder for them. I'm aware it's their money, not mine, and they wouldn't be getting a say in how their savings are invested. But this way I'll pay them back much more than they would otherwise have had when they're old enough to use the money. Should I leave it where it is or invest it?  

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  • tacpot12
    tacpot12 Forumite Posts: 7,694
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    You have to think about when they will want their money and whether you will be able to release their money to them when they want it, if you invest it how you want to. 

    I think that it would be better to pick a more liquid form of investment, such as a fund that invests in stocks and shares. Your children could learn a lot if you discuss why you picked the fund(s) you picked, and they can see the value of their investment more easily than they can with bricks and mortar. You have three properties already, so you are well covered, and can invest in a fourth for yourself if you want to do so. 
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • JGB1955
    JGB1955 Forumite Posts: 3,354
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    Assuming your children are under 18 - they can't own a property.
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  • Brie
    Brie Forumite Posts: 8,263
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    Wouldn't it also mess up any FTB status they might have?
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  • REJP
    REJP Forumite Posts: 325
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    Are the children old enough and sensible enough to make an informed decision?
    Have you thought about Capital Gains Tax when they want to sell the  property?
    Also, they might not want to be joint owners with landlord responsibility for repairs etc.
  • comeandgo
    comeandgo Forumite Posts: 5,672
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    How you going to convince the legal team who check where the deposit has come from that you are not taking their money as children cannot own property. 
  • Seakay
    Seakay Forumite Posts: 4,264
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    It's not the savings your children have made, it's your money in a tax advantageous account which you were able to open using their names.
    If you choose to invest your money in another way which is even more advantageous for you, you may risk being prosecuted for tax avoidance.
  • CapricornLass
    CapricornLass Forumite Posts: 629
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    The trouble with bricks and mortar is that it isn't easy to realise its value quickly - houses take time to sell.

    If you are thinking of an investment over the long term, (which I think in Financial terms is anything over 5 years), then some form of investment in stocks and shares is probably the way to go.
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  • jg119980
    jg119980 Forumite Posts: 3
    Second Anniversary First Post
    JGB1955 said:
    Assuming your children are under 18 - they can't own a property.
    Semantics as to who legally owns the property I believe, the point is it’s a type of investment for the children’s future. 
  • ripongrammargirl
    ripongrammargirl Forumite Posts: 108
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Technically I would say it’s still your money and not your children’s as you are saving it, not them. You don’t say how old they are and if you are still saving etc. From my point of view it would be a great idea to invest in a property rather than cash assets which will get eaten away by inflation. It will also get them on the property ladder as they could live in it when old enough to move out (or you want them out of your house!!). Property always seems a good idea especially in this day and age of house prices. By the time they are old enough houses will be several million £ the way it is going!
  • 2702
    2702 Forumite Posts: 18
    10 Posts First Anniversary
    Investing in a property is a great idea. All the previous negative comments can easily be overcome. Your kids will benefit much more from this.
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