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Saving for my child's future

kv11x
Posts: 45 Forumite


Hey guys, as new parents me and the wife want to try give our child as best of good start as we can. We are looking at opening an ISA. As we understand it it our child could gain more with a Junior ISA stocks and shares over the next 18 years. From various generous family and friends we should have around £700 to put in at the start. What's the general recommendation here as to where to start and where to put it? Stocks and share I believe you cannot take it out of that tanks?
Cheers
Cheers
0
Comments
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Junior ISA is a good option if you are comfortable locking cash away until the child turns 18. It shields the income/gains from any tax. If you held the money yourself, and you have substantial savings yourself, it could erode your own ISA allowances and you may end up paying income tax on interest.
£700 is quite a modest amount in the grand scheme of things so I'd say there is less of a rush to popping it into a JISA if you also don't have megabucks saved up.
Note with JISAs you have no ability to remove the money. Once it's in there it is locked until 18, and then it's exclusively the child's to spend or keep saved.
On your final comment - the JISA is a wrapper around the cash/investment. Within that wrapper you can move investments, you can swap from risky to not risky, from stocks to cash etc.1 -
Over 18 years the likelihood of a Stocks and shares JISA, invested in a standard global index tracker tanking is very small. Looking at historical statistics the chance is zero.
The chance of it significantly outperforming cash interest is high, based on the same statistics.
These two platforms offer S&S JISA's with no platform charge and the charge for a global index tracker can be as low as 0.1%
Junior ISA | Invest in a Junior Stocks and Shares ISA | Fidelity
Junior ISA | Hargreaves Lansdown (hl.co.uk)
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£700 is plenty to start a S&S Junior ISA.
My kids are with Fidelity as they charge no platform fees until age 18 and are invested in Fidelity Index World a developed world stock market tracker at a cost of only 0.12% pa (with a 0.02% rebate when the holding gets big enough).
It's done very well but has the potential to crash around 50% every so often. For a smoother ride but perhaps less growth maybe go for a multi asset fund such as the HSBC Global Strategy series (also available on Fidelity) for which there are a few versions at around 0.2% pa.
Remember to reduce risk as they get closer to withdrawal at 18 or whenever after they might use the money.1 -
To follow up the above post, you can also use Fidelity's simple investment chooser ' Navigator'
Go for 'Growth funds' and then ' Cost focused' and then choose your risk level ( don't be too cautious as the time scale is long at 18 years)1
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