Investing a 9 year olds inheritance money.

ITtim

Hi Everyone, my 9 year old son looks set to inherit about £7000 in the near future. As I understand it the money will be in our (the parents) control and for us to do with it as we please on his behalf (ie its not being given in a trust fund)

My wife and I are keen to ensure that this money goes towards something in his future such as Education or property.

Since he has a while before any of those scenarios will arrive we're keen to make the money work for him but we have little knowledge of such things, we wouldn't be looking to add regular amounts at this stage but it would be handy to know we could in the future.

The following are my current thoughts....

Either a Child investment Isa. My belief is that the this should offer the best chance of increasing the pot over the next 8-10 years .

or

We open a high interest savings account and let him have the momey when he's old enough.

or

A childrens saving account where we can just deposti the money and not thing about it.

However, as I say, this is something we're pretty new to so we'd appreciate any input from some more knowledgeable people as I'm sure there are more things to consider and maybe some alternative options.

Thank you in advance.

km1500

Not a savings account as you will lose money because of inflation

You should look at investing it

eskbanker

A S&S Junior ISA (i.e. what you refer to as a child investment ISA) is likely to be the best option, as long as it's appropriate for the money not to be accessible until he's 18 - as you rightly say, investing will typically trump saving over that sort of timeframe.

tacpot12

As he is 9 years old, and hence unlikely to be able to acces the money until he is 18, investing it in a Child Stocks & Shares ISA is probably the best way to save for his future. 

You should discuss this legacy with him, along with where it will be invested. I would recommend that you look to invest it in a low cost global tracker fund, such as the HSBC FTSE All-World Index Fund. This is a large (£3bn) and well diversified fund with very low costs. All of these are very desirable attributes. If you want to invest in anything else, I would compare it to this fund as being something of a benchmark.  

ITtim

Thank you everyone, looks like a stocks and shares ISA is the way to go in that case.

theoretica

Just to be clear, unless the will actually gives the money to you as parents, it is very likely that it will become his absolutely when he turns 18 (or 16 in Scotland).  Which will happen automatically with junior ISAs. So your control of it being spent for education or property will need to be through how you have taught him to manage money and respect the source of it.

ITtim

tacpot12 said:

As he is 9 years old, and hence unlikely to be able to acces the money until he is 18, investing it in a Child Stocks & Shares ISA is probably the best way to save for his future. 

You should discuss this legacy with him, along with where it will be invested. I would recommend that you look to invest it in a low cost global tracker fund, such as the HSBC FTSE All-World Index Fund. This is a large (£3bn) and well diversified fund with very low costs. All of these are very desirable attributes. If you want to invest in anything else, I would compare it to this fund as being something of a benchmark.  

So based on the fact I know nothing about stocks and shares do I need to find a provider who invests in this fund? I had been looking at Welathify on the basis that I just want to set it up and ignore it for the best part of a decade. I'm always wary of 'Top 10 Cash isa' lists etc unless they're on this site but there doesn't seem to be any sort of best buy list for stocks and shares isa's for juniors on here. (that I can see anyway)

ITtim

theoretica said:

Just to be clear, unless the will actually gives the money to you as parents, it is very likely that it will become his absolutely when he turns 18 (or 16 in Scotland).  Which will happen automatically with junior ISAs. So your control of it being spent for education or property will need to be through how you have taught him to manage money and respect the source of it.

Yes, and this is probably one of my only real concerns, based soley on the fact that I had access to some savings in my name and at the age of 18 I blew it on a guitar

My understanding is that the money will be passed to us and its then up to us how we deal with it. I think on balance we need to show that we trust him to use the momey wiseley.

Albermarle

ITtim said:

tacpot12 said:

As he is 9 years old, and hence unlikely to be able to acces the money until he is 18, investing it in a Child Stocks & Shares ISA is probably the best way to save for his future. 

You should discuss this legacy with him, along with where it will be invested. I would recommend that you look to invest it in a low cost global tracker fund, such as the HSBC FTSE All-World Index Fund. This is a large (£3bn) and well diversified fund with very low costs. All of these are very desirable attributes. If you want to invest in anything else, I would compare it to this fund as being something of a benchmark.  

So based on the fact I know nothing about stocks and shares do I need to find a provider who invests in this fund? I had been looking at Welathify on the basis that I just want to set it up and ignore it for the best part of a decade. I'm always wary of 'Top 10 Cash isa' lists etc unless they're on this site but there doesn't seem to be any sort of best buy list for stocks and shares isa's for juniors on here. (that I can see anyway)

There are two separate issues to consider.

Choice of platform /provider -  that is the company who operates the S&S ISA, takes your payments, buys and sell the investments you choose, arranges withdrawals, runs the website, call centre etc. The main issues to consider are charges, choice of investments available and how efficiently run they are.

Choice of investment - This is where your money actually is within the S& S ISA. The providers normally have some ready made funds, so no need to pick individual shares or anything like that, but you do need to do a bit of research to see what kind of fund suits best. In very simple terms those with a high equity( share ) content , will be more volatile but over many years should give more growth .
Normally investment funds have their own charge separate from the platform charge, although some roll them into one.

MSE will not recommend any particular investment but there is some general guidance here
Stocks & shares ISAs: find the best platform - MSE (moneysavingexpert.com)
How to invest in a stocks and shares Isa: The quick and easy guide | This is Money

If you wanted to do this in the child's name you are better with a Junior S&S ISA. Two providers offer these with zero platform charges ( HL & Fidelity) although they will get full access at 18. Otherwise you can just open a S&S ISA in your name and have full control. It may be a good way to get more familiar with investing generally. 

ITtim

Excellent, thank you.

xylophone

My understanding is that the money will be passed to us and its then up to us how we deal with it. 

Otherwise you can just open a S&S ISA in your name and have full control.

If the bequest has been left to your child absolutely and unconditionally, then he is the beneficial owner and even if held in a standard child account in his name which you controlled as bare trustee, (not a JISA) he would have the absolute right to access and control at age 18.

 In the above circumstances, it would not be correct to save or invest the money in your sole name/ the sole names of you and your spouse as the money is not yours.

With regard to the Junior ISA, although he could request control at age 18, he would not be able to take any money / sell assets out of the account until he reached the age of 18.