Best savings/ investment for 14 year old?

HeatherHemlock

Hi, my daughter's started doing some small cleaning and odd jobs. She's being paid in cash, likely to make around £80 a month approx, we think. 

She has a current account with Nationwide, chosen as they were the most ethical option for a free current account. We live in a very rural area so actual branches of any bank are few and far between, it's a good half hour drive to get to a town with a Nationwide to pay her money in. 

She wants to put half of her income into her current account, and invest the other half in 'something.' I'm looking at junior ISAs, premium bonds etc, but I'm not sure what's the best way to go. She wants an ethical option as well, not something that's going to invest her money in fossil fuels. 

She'll be 15 in two weeks. 

She also has a child trust fund account, and reading some of the threads on here it doesn't sound like that's the best performing option. We've never paid into it, it's just the original £250 voucher the government sent when she was born. So I think I can close that and move it across to whatever is the best savings/ investment option as well. 

I've looked at the Atom account, with the 6% interest, as a possibility. We just need to check them on the Ethical Consumer guide.  

Any other good options for kids to save or invest small amounts? Thank you! 

eskbanker

HeatherHemlock said:

She also has a child trust fund account, and reading some of the threads on here it doesn't sound like that's the best performing option. We've never paid into it, it's just the original £250 voucher the government sent when she was born. So I think I can close that and move it across to whatever is the best savings/ investment option as well.

That money isn't accessible until she's 18, but can be transferred to a junior ISA between now and then, which is a more competitive market than leaving it in a CTF....

https://www.moneysavingexpert.com/savings/child-trust-fund-vouchers/
https://www.moneysavingexpert.com/savings/junior-isa/

refluxer

A few points worth mentioning...

She can't have both a Child Trust Fund and a Junior ISA so if you're considering a Junior ISA, then you'll have to find one that accepts transfers in from Child Trust Funds, open it, request the transfer and you'd have to wait until the funds have transferred before paying into it.

Before you go down that route though - what type of CTF does she have now (cash or stocks & shares), who is it with and what is the value ? If it's a cash CTF on a poor rate, then transferring it to a higher-paying Junior ISA would be a good idea regardless of whether she intends to pay into it further or not. If it's a stocks and shares CTF, then the decision might not be so clear-cut, though.

Obviously she'd need to be aware that she wouldn't be able to access any money in a CTF or Junior ISA before the age of 18, so the money will be locked away without access until then.

At 14, she'll be fairly limited in the types of savings accounts she can open herself, unfortunately. Atom, for example. require you to be 18 for their Fixed Savers, which is fairly common. Fixed Savers also generally aren't appropriate for saving regularly as most have a limited funding window (typically 1-4 weeks), after which you can't pay anything more into them.

For saving modest amounts on a regular basis (ie. £40/month), I think her best option is going to be to open either a better-paying children's easy access account or find a regular savings account that is suitable for children.

I don't whether these banks meet your ethical requirements (I suspect most UK banks and building societies won't, TBH), but here are a couple of good examples...

• Easy access : HSBC pay 5% on balances of up to £3000 with their MySavings account (up to age 18)
• Regular Saver : Halifax pay 5.5% on their £100/month (max) Kids' Monthly Saver (up to age 16)

The current best options for kids' savings account are here : https://www.moneysavingexpert.com/savings/child-savings-tax-free/

Unfortunately, most children's savings accounts will require a branch visit or a postal application to open, although some (such as the two I mentioned above) will allow an online application if the parent is already a member. As applying by post often involves posting proof of ID documents such as birth certificates, I tend to prefer the former option. The good thing about (for example) opening an account such as the HSBC MySavings account is that, once you've visited a branch to open it, it can be managed online after that.

Speaking of account management, it sounds like she's going to have issues with cash if you're not near a branch of any bank or building society to pay it in - is it not possible for her to request online/electronic payments for the work she's doing ? If cash is the only option, then I guess one option would be for her to give you the money and you pay her appropriate account(s) online - just bear in mind that once she starts earning over £100 in interest from money given to her by you, the whole lot will potentially be liable to tax at your own rate unless it's a CTF or Junior ISA (in which interest is earned tax-free). This may not be an issue with the modest sums you're talking about for a good while though, but worth bearing in mind for the future.

xylophone

Coventry BS will accept a transfer of CTF to Junior ISA.

You can ring 0800 121 8899 for details.

https://www.coventrybuildingsociety.co.uk/content/dam/cbs/member/pdfs/useful-forms/ctf-to-junior-isa-transfer-authority-form.pdf

MX5huggy

If she was more inclined to invest than save then transfer the CTF to a Junior ISA with Hargreaves Lansdown who don’t charge a platform fee for JISA’s. Once there you/she has the choice of hundreds of different funds which have different ethical standards.