Long term child savings advice

dhardy91

Good morning

New to this forum so apologies if this has been posted before. 

I'm after some really basic advice on setting up a stocks & shares savings account for my kids for 20ish years each, 2 kids so looking at putting in £50-100 each per month. 

Emergency funds are not an issue, this is just extra cash we have and something we have wanted to do for years, and now we are fortunate enough to be able to do so. 

I'm after the very basics of how to set this up, i bank with halifax do I just contact them, or are there other better companies to use? 

Ideally we will never want to touch it, or even look at it, just quietly put it away each month and let it grow. 

Thanks in advance. 

refluxer

If you want to invest for your kids, then a Junior Stocks and Shares ISA could be a good option as it would avoid potential tax issues further down the line and also avoids eating into your own ISA allowance. The money from a Junior ISA will be accessible to the child from the age of 18 though, so you won't get the full 20 years you're after and you might not want to start one if your kids are older.

MSE doesn't tend to give investing advice, but does have a few comments and links to some other Junior Stocks & Shares ISA guides here :

https://www.moneysavingexpert.com/savings/junior-isa/#tiplist-6

It's likely that a high-street bank may not be the best provider - Halifax don't seem to offer Junior S&S ISAs by the looks of it, anyway.

eskbanker

dhardy91 said:

I'm after some really basic advice on setting up a stocks & shares savings account for my kids for 20ish years each, 2 kids so looking at putting in £50-100 each per month. 

First thing to decide is who controls the money when they reach adulthood.

If you open accounts in their names, such as Junior ISAs, then they'll have the unfettered legal right to access the money when they're 18, whether or not that's what you had in mind.

If that's unacceptable to you then you'd need to open accounts in your name, and it would remain your money until deciding when to pass it on.

Albermarle

These two providers waive the platform fee for JISA's, so only the charge for the investment(s) applies.
A simple global index tracker will cost between 0.1% and 0.2% pa.

Junior ISA | Invest in a Junior Stocks and Shares ISA | Fidelity
Junior ISA | Junior Stocks and Shares ISA | HL

dhardy91

Thank you all for the advice. 

Personally I couldn't think of a worse age to receive a load of money than 18, so that rules out the JISA. 

I'm now looking into a single long term stocks and shares ISA that I can split between them in the future when the time is right. 

daveyjp

I've never understood the idea that 18 is a bad age to receive money.

18 is adulthood.  Use the 18 years to educate children about money matters, without this there is a chance they will spend the money unwisely however old they are, potentailly racking up debts which the money is then used to pay off.

There's also a lot to be said about part time jobs at 16 for learning about money management and by 18 they may be entering full time employment where a lump sum may be useful.

B0bbyEwing

daveyjp said:

I've never understood the idea that 18 is a bad age to receive money.

18 is adulthood.  Use the 18 years to educate children about money matters, without this there is a chance they will spend the money unwisely however old they are, potentailly racking up debts which the money is then used to pay off.

There's also a lot to be said about part time jobs at 16 for learning about money management and by 18 they may be entering full time employment where a lump sum may be useful.

I had a part time job from 14.

When I got access to my money I spent the lot. £1000s, on nothing.

It taught me a lesson, sure, but not everyone will learn the lesson that way, or at all. 

refluxer

dhardy91 said:

I'm now looking into a single long term stocks and shares ISA that I can split between them in the future when the time is right. 

If you're not making full use of your own ISA allowance, then yes - saving or investing for your kids in your own name will obviously allow you to have full control over when they get the money. Keep an eye on the platform fees and costs though - they may be higher for an adult S&S ISA than a junior S&S ISA.

bongoali

Hello sir,

Have a read of this link. Would suggest “beginner” unless there’s a lump sum going it up front.

https://monevator.com/compare-uk-cheapest-online-brokers/

pennypincher64

I took out the Halifax Junior ISA but I was a bit shocked that after the first year, while the rate was communicated as fixed for a year, what actually happened was the second year had a new savings pot and the first one doesn't count in the second year, effectively meaning that after the first year it is simple interest rather than compounding interest, which over 18 years is a substantial loss of earnings..has anyone else noticed this?

Reaper

Halifax isn't offering a fixed rate Junior ISA at the moment so I can't see any details. However fixed rate accounts tend to work differently to variable rate. They are normally only open for a short time as they are dependant on short lived market conditions. As a result money cannot be added to them later.

From what you said I am assuming your account was fixed for a year. At the end of the year the interest could not be used to buy more fixed rate savings so it got put in a variable rate pot instead. Presumably compounding is still occurring as you are now earning interest on that interest.