Savings for children , JISA, SIPP

ljmoneysaving

Hi, I have a 6 year old, he has a few thousand in a low interest saving account. I want to start investing this for him and adding around £100 a month into this.
I have looked at Junior S&S isa and looked into junior SIPP. 
My minds a little blown on it all!
I was going to go ahead with a vanguard life strategy 100 but I keep reading bad things about it, like it is expensive. 
I'm a complete investing novice so any thought, opinions would be gratefully accepted 🙂

masonic

I don't think it can be described as "expensive". There are ways to cut costs slightly by opting for cheaper index funds, but this may be a false economy if it makes things too complex. You can find a good review of it and other competitor options here: https://monevator.com/passive-fund-of-funds-the-rivals/

Going for 100% equities is a sensible option for a 6 year old, especially in the case of a SIPP where it will be held for over half a century.

Albermarle

A JISA is usually a good idea, but a SIPP is more debatable. Some posters think it is a good idea due to the tax benefit, but others have regretted tying up money for 40 or 50 years, when their offspring probably will benefit a lot more from funds when they are younger.
VLS 100 is not expensive, but there are some marginally cheaper options, such as Fidelity World  . Compared to other 100% equity global index trackers VLS 100 has a higher UK weighting, which in recent times has dampened its performance, but in future may or may not be the opposite.

dunstonh

I have looked at Junior S&S isa and looked into junior SIPP. 

There is actually no such thing as a Junior SIPP.   That is just marketing by a provider.   All retail pension types (SHP, PPP & SIPP) can be used for minors.  There isn't a specific product type for them.

I was going to go ahead with a vanguard life strategy 100 but I keep reading bad things about it, like it is expensive. 

There is nothing bad about VLS100.    The discussions on this site are more nuanced than that.   VLS100 is the odd one out in the VLS range.   The rest are multi-asset funds.   VLS100 is global managed fund.  Yes, it is a fettered fund of funds like the others in the range but being 100% equity, there are no other asset classes and it is management decisions that decide which parts of the world are included, which are not and how much is allocated to each.    

Unlike the other multi-asset funds, you are comparing VLS100 to global equity funds and in particular to global trackers.   Global trackers can be more then half the cost but its already from a low point.     

So, as I said, its not that VLS100 is bad.   It's just that for those that are looking at passive solutions, a global tracker is likely to be better..... unless you like Vanguards management decisions on VLS100.

poppy10_2

ljmoneysaving said:

I was going to go ahead with a vanguard life strategy 100 but I keep reading bad things about it, like it is expensive. 

It's really not that expensive. If you have £10,000 invested then the difference in fund costs between VLS100 and the equivalent cheapest global tracker is £10 per year. Not worth worrying about.

The main reason to avoid VLS is that it is massively overweighted to British stocks, which have been underperforming for the last quarter of a century (FTSE 100 is up only 8% since 1999, compared to over 200% for the American S&P 500). 22% of VLS 100 is invested in British stocks even though the British stock market only makes up less than 4% of global market cap. The underperformance doesn't look like it is going to change any time soon with Brexit and both red and blue Tory parties essentially having the same economic policies. So better to stick to a global tracker that weighs each country in proportion to its current size -something like VWRL or Fidelity or HSBC's global tracker.

xylophone

Possibilities for JISA.


https://www.hl.co.uk/investment-services/junior-isa?utm_source=money.co.uk&utm_medium=affiliate&utm_campaign=Money.co.uk+JISA+AFMON&theSource=AFMON&Override=1

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

Both have had favourable mentions from other posters.

Below may be worth a read.

https://monevator.com/etfs-vs-index-funds-differences/

https://monevator.com/best-global-tracker-funds/

https://monevator.com/low-cost-index-trackers/