How best to 'invest' for my son, and two nieces?

gmclean

About to come into money, and I'm looking for the best options to provide a 'trust fund' (which may or may not be the right way to go!) for all three kids. One is 3, one if 4, the other is 9.

Ideally I'll have £10,000 for each of them, and would like it locked away until they hit 25. 

What's the best way to do this that has a low overhead (I don't mind some admin but kinda looking for something that will run in the background mostly) and won't be a burden to them when it gets released.

Lots of different trust fund terminologies, not to mention ISAs, or savings, or even pensions (I may take some of the money and give them all a pension too...)

Pointers, advice, reading materials, hit me! I need all the help I can get.

QrizB

Do they have Junior ISAs already? If they do, paying into those might be the simplest option.

You can't pay £10k at once but you can pay £9k before April and £9k after. But they'll be able to get at it when they're 18., not 25.

https://www.moneysavingexpert.com/savings/junior-isa/

Albermarle

I think if you look into the costs of setting up trust funds and the hassle and cost of running them, then you will probably think again. Especially as you are not talking about huge sums of money.

In reality you have two choices;
1) You ( or in fact their parents) set up some children's accounts for them,  like the Junior Isa's mentioned above. They will get access to the money at 18.
2) You save/invest the money in your own personal accounts and give them the money when you want to. 

Notepad_Phil

You might want to think about what you will do if other kids come along - the youngest is 3, so presumably others could come along?

If giving additional similar amounts of money to any newcomers won't be an issue then it may make sense to use a Junior ISA for each of them (though they will gain access to the money at 18 not 25).

But if finding additional sums of money might be an issue, or you really want them to only receive the money at 25, then you could consider investing the money in your own name and then pass the money across to however many kids there may be at a time of your choosing. If you choose this option then you might want to update any will you have so that this investment is earmarked for children and nieces/nephews.

One last thought, given the period of time this will be invested, then personally I'd go for a passive 100% equity fund that is globally diverse, perhaps something like the HSBC FTSE All World Index Accumulation fund.

gmclean

Thanks all.

Definitely no more kids coming. And they don't have Junior ISAs. Don't want them getting access at 18 (how sensible were you at 18! 😉) so will look to just investing it for longer term.

May also put a small amount into a Pension for each of them and use that when they are able to start earning as a way to talk about saving/planning for future. 

Albermarle

gmclean said:

Thanks all.

Definitely no more kids coming. And they don't have Junior ISAs. Don't want them getting access at 18 (how sensible were you at 18! 😉) so will look to just investing it for longer term.

May also put a small amount into a Pension for each of them and use that when they are able to start earning as a way to talk about saving/planning for future. 

It might be a good idea to have some savings in their name ( if not all ). It can be a good introduction to bank accounts, handling money etc. They can put birthday money in them,  and they can learn that when it is spent it is gone.
Top children's savings accounts: 5.5% interest

There are conflicting opinions about starting pensions for children. 
My own view is that they can likely make more use of the money when they are younger. When they get to 60, then they will probably have a pension to draw on anyway. 

mebu60

Albermarle said:

It might be a good idea to have some savings in their name ( if not all ). It can be a good introduction to bank accounts, handling money etc. They can put birthday money in them,  and they can learn that when it is spent it is gone.
Top children's savings accounts: 5.5% interest
 

I second @Albermarle 's suggestion regarding giving children some savings as part of their financial education. Worked out well for me with my daughter. 

Keep_pedalling

gmclean said:

Thanks all.

Definitely no more kids coming. And they don't have Junior ISAs. Don't want them getting access at 18 (how sensible were you at 18! 😉) so will look to just investing it for longer term.

May also put a small amount into a Pension for each of them and use that when they are able to start earning as a way to talk about saving/planning for future. 

Wouldn't it be better to put at least some into a JISA for them to have access to at 18. Use a S&S one so you can use it as a tool to teach them about saving and investing. This is what we have done with our three grandsons, and if they want to spend or invest it when they get access to it that is fine. Hopefully we still be around to advise them when they are old enough to be able to be given some financial advice. 

Eco_Miser

gmclean said:

Thanks all.

Definitely no more kids coming. And they don't have Junior ISAs. Don't want them getting access at 18 (how sensible were you at 18! 😉) so will look to just investing it for longer term.

May also put a small amount into a Pension for each of them and use that when they are able to start earning as a way to talk about saving/planning for future. I

I was sensible enough at 18 to leave university with more than when I entered.

If you don't trust them to be sensible with a windfall at 18, what do you think will change by the time they're 25?

Do you really think giving a four year old money they can't access until nearly 60 is a sensible use of your money? It may mean they don't have to save so much pension themselves, it may also mean they can't take advantage of the tax-savings pensions offer.  A contribution towards a home or car would be much more appreciated.

Albermarle

Eco_Miser said:

gmclean said:

Thanks all.

Definitely no more kids coming. And they don't have Junior ISAs. Don't want them getting access at 18 (how sensible were you at 18! 😉) so will look to just investing it for longer term.

May also put a small amount into a Pension for each of them and use that when they are able to start earning as a way to talk about saving/planning for future. I

I was sensible enough at 18 to leave university with more than when I entered.

If you don't trust them to be sensible with a windfall at 18, what do you think will change by the time they're 25?

Do you really think giving a four year old money they can't access until nearly 60 is a sensible use of your money? It may mean they don't have to save so much pension themselves, it may also mean they can't take advantage of the tax-savings pensions offer.  A contribution towards a home or car would be much more appreciated.

Some will be sensible at 18.
Some will not be sensible at 25
Some will not be that sensible at 18, but more sensible at 25.

Thinking back my daughter went to Uni at 18 and it was such an exciting time in a new city for someone still young, I have to say she was less than sensible. Not just with money but also drinking, late night parties, eating junk food  etc .
At 25, she was on her second job, saving for a deposit, going to the gym, eating healthily etc 

22225

Lots of people on this forum have great pensions. I think it's a bit biased. On the outside world, plenty of people get to 60 and don't have good pensions. If you spend your life taking a lot of time off with the kids, a relatively low paid charity sector job. Lots of public sector pensions are linked to state pension age. So I would be delighted to get a pension boost surprise at 60. Pay off the mortgage, pay for the kids weddings, go on a bucket list holiday. Remember my parents.