Children - investing

lj3287

Hi

I have two children and I am looking to invest their monthly Child Tax credit and Child Benefit until they are 21. They are 3months and 6 years old and the total will be around £75 per month each until they are 21 (I know it stops earlier)? In addition I will add a few lump sums during the year as they receive gifts etc.

I am new to savings and investments, could I have some opinions on what is the best course of action?

Cheers

LJ

lj3287

Any views?

LJ

martinman3

To assist others in advising you, could you clarify whether you really mean investing, on the stock market for instance, or do you mean saving ?
In other words how much risk are you prepared to accept ?
Will you need access to the money before they are 21 ?
Does the 3 month old already have a Child Trust Fund and if so is it savings, stakeholder etc ?
see http://www.childtrustfund.gov.uk

lj3287

martinman3 wrote: »

To assist others in advising you, could you clarify whether you really mean investing, on the stock market for instance, or do you mean saving ?
In other words how much risk are you prepared to accept ?
Will you need access to the money before they are 21 ?
Does the 3 month old already have a Child Trust Fund and if so is it savings, stakeholder etc ?
see http://www.childtrustfund.gov.uk

I don't know whether saving or investing is the best, but i suppose I am willing to take a medium level of risk.

Yes, the three month old does not have a trust fund yet.

Lazy_Runner

I am not an expert but I offer this:

With stock market investments, you are looking at a 5 year minimum timescale. Also some companies start reducing exposure to the stockmarket when the child is 13 and start moving the funds automatically into cash etc so a major stock market crash won't affect the fund value by much.

Also if you get a specific CTF account, the child takes ownership of the money at 18.

If I had a young child as your youngest, I would certainly consider a stock market investment kicking it off with a CTF voucher.
With a child as old as your oldest, I would find it a little more tricky. I may invest in the stockmarket and from when the child is 14 - 15, I would start moving the funds into cash.
In both cases the funds would need to be reviewed on a monthly/quarterly basis and matters would need to be kept in hand.

Or you could go for savings accounts, there are some very good ones out there, I believe one is paying upto 10% (not sure which though). If you trawl through the threads on this forum, you should find some good accounts.

sloth

Lazy_Runner wrote: »

I believe one is paying upto 10% (not sure which though). quote]

the halifax childrens regular saver pays 10% upto £100 a month

Murphy_The_Cat

lj3287 wrote: »

Hi

I have two children and I am looking to invest their monthly Child Tax credit and Child Benefit until they are 21. They are 3months and 6 years old and the total will be around £75 per month each until they are 21 (I know it stops earlier)? In addition I will add a few lump sums during the year as they receive gifts etc.

I am new to savings and investments, could I have some opinions on what is the best course of action?

Cheers

LJ

I subject that is very close to my heart :j

I have been investing for my two children (aged 1 and 4) ever since they were born and I have taken the route of utilising the unused element of my annual ISA allowance (& Mrs Cats) for doing their monthly investing.
I do this via Hargreaves Lansdown and Im able to instantly see how 'their' investments are doing. Most funds will allow you to regularly save £50 per month into them (IIRC Invesco Perpetual will let you put £25 per month in) so you could elect for £75 into one fund, £50 & £25, or £25 £25 £25 if you wanted to.

I have not (& will not) put a single1p into my CTF as I think that they have a fundamental flaw- IMO, giving a youth a large tax free sum at aged 18 is ultimate folly - doing it my way, the money remains YOURS, and if your children (hopefully not) turn out to be badduns, at least you won't be forced to hand them a load of cash to waste !

lj3287

I need to do a bit more investigation I think, probably go the stocks route until a few years before they mature.

I also have concerns about the CTF, I want to be in control of when they get the money, you never know if they will blow their new found fortune on their coke habit!

Hopefully not but you never know.

What funds are looking good as a starter?

Cheers

LJ

martinman3

But still open the CTF for your youngest child otherwise the voucher will be invested in a scheme chosen by HMRC after a delay of several months I believe.

Murphy_The_Cat

lj3287 wrote: »

I need to do a bit more investigation I think, probably go the stocks route until a few years before they mature.
What funds are looking good as a starter?
LJ

That all depends on your attitude to risk for a long term investment for your child.
Personally, I'm going for (very) high risk funds, which, when they have reached a (to be determined by me ) acceptable level of profit, I will start syphoning them off into lower risk funds.
Of course, if you use someone like H-L for your regular savings into an ISA, you can change your fund choice as often as you want.
For a quick guide into 'whats hot' and 'whats not, have a look here
but plesae remember not to rely on past performance as a guarantee of future performance. Some people swear by the funds that H-L recommend in their Wealth 150
(although some people don't )

martinman3 wrote:

But still open the CTF for your youngest child otherwise the voucher will be invested in a scheme chosen by HMRC after a delay of several months I believe.

Absolutely right, I missed that bit out - just, IMO, never add any money to it.

dolce_vita

This is good article is worth taking a look at.

http://www.thisismoney.co.uk/tax-advice/article.html?in_article_id=429413&in_page_id=11