Newbie help buying Vanguard Shares for my Son please

mrnicknick

Hi, I'm fairly new to investing, but do have an Interactive Investor account (shared with a family member) I use to buy Vanguard Lifestrategy funds (80/20) and other shares.

My son has just turned 18 so I intend to invest his £100pm rent into the same Vanguard 80/20 fund. The idea is that the money will be his when he is 50yrs old providing he continues to put in a minimum of £100 in a month going forward. 

I'd like create an account in his name but still have access and don't really want him paying the £10 monthly fee that ii charge me. 

Is there a cheaper platform or a better way of me managing his account until he can do it himself please? 

regards, 

Nick.    

Sg28

If its that long term why not start a pension? That £100 per month would turn into £125 a month after tax relief but he won't be able to access until 57.

As he is 18 he would be the one to open the account and have full control. 

Keep_pedalling

Anything in his own name other than a pension is his to do with as he wishes whenever he likes you can’t maintain control once you have gifted it. 

DeLaSole

Hi mrnick,

Are your son's nearer term needs looking ok? For example, funding during uni years if going,  or a house deposit if planning to live independently?

If this £100pm is only going to be needed for such a long-term plan as you've said, I would consider a pension myself so that the investment also benefits from tax relief. 

The pension can't be accessed for 40 or so years and, because of that, there may be less risk of him tinkering about/making costly errors, given there's no immediate benefit, so to speak.

Best wishes.

mrnicknick

DeLaSole said:

Hi mrnick,

Are your son's nearer term needs looking ok? For example, funding during uni years if going,  or a house deposit if planning to live independently?

If this £100pm is only going to be needed for such a long-term plan as you've said, I would consider a pension myself so that the investment also benefits from tax relief. 

The pension can't be accessed for 40 or so years and, because of that, there may be less risk of him tinkering about/making costly errors, given there's no immediate benefit, so to speak.

Best wishes.

Thanks, yeah, i forgot to say I was going to open a stocks and shares ISA for him and have the Vanguard fund in that. Didn't think about a pension though, good idea about the pension though. I'll look into that for him, thanks. 

fabsaver

If the investment is purely Vanguard funds it's worth considering using Vanguard directly. I believe they make it quite easy for a family member to pay into the pension.

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

"Who can pay into my pension?"
"You can receive payments from anyone with a Vanguard account, such as a family member."

Albermarle

Often for people his age the best thing is to save into a Lifetime ISA ( LISA) The government will top up each payment by 25% up to a limit of £4K.
The idea is to use it towards a first time house purchase. If he just withdrew it to spend, you lose the bonus ( and a bit more)
Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)

mrnicknick

Albermarle said:

Often for people his age the best thing is to save into a Lifetime ISA ( LISA) The government will top up each payment by 25% up to a limit of £4K.
The idea is to use it towards a first time house purchase. If he just withdrew it to spend, you lose the bonus ( and a bit more)
Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)

I didn't know about these, it sounds ideal, thank you! 

DietIrnBru

mrnicknick said:

Albermarle said:

Often for people his age the best thing is to save into a Lifetime ISA ( LISA) The government will top up each payment by 25% up to a limit of £4K.
The idea is to use it towards a first time house purchase. If he just withdrew it to spend, you lose the bonus ( and a bit more)
Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)

I didn't know about these, it sounds ideal, thank you! 

Just be mindful of where you plan to buy a house - many have been caught out the cap of £450,000.

Albermarle

mrnicknick said:

Albermarle said:

Often for people his age the best thing is to save into a Lifetime ISA ( LISA) The government will top up each payment by 25% up to a limit of £4K.
The idea is to use it towards a first time house purchase. If he just withdrew it to spend, you lose the bonus ( and a bit more)
Lifetime ISA (LISA): how they work & best buys (moneysavingexpert.com)

I didn't know about these, it sounds ideal, thank you! 

As above make sure you read all the conditions first.

Exodi

mrnicknick said:

My son has just turned 18 so I intend to invest his £100pm rent into the same Vanguard 80/20 fund. The idea is that the money will be his when he is 50yrs old providing he continues to put in a minimum of £100 in a month going forward. 

To be clear, if you are investing the money in his name, you don't really have the ability to add terms like 'providing he continues to put in a minimum of £100 in a month going forward'.

Even if you could, it would be a bad idea. I'm thinking back to when I was around 18-20, I was up to my eyeballs in payday loans. I can only imagine my reaction to my parent saying "If you don't maintain a minimum contribution of £100 a month, you won't get access to this money when you are 50", I'd imagine at the time I'd probably think "so what?".

18 year olds aren't famous for their long term financial planning, and even ignoring this, 50 is a long time with a lot of financial hurdles that your son would need to navigate beforehand. Also, let's say he did contribute for a while, but then stops - what then? Empty the pot that he has contributed into your own account?

I think you either gift it to him to put in an account in his own name now (LISA is a good idea as below) or you keep the money in your own name as a future gift (but you can't realistically expect him to 'contribute' to your own personal savings.