Savings / ISA's for children

Simon918

I am a complete Virgin to this, so at least buy me a drink and dance with me a little first !

I am the proud father of two great kids aged 7 and 9 years.

Through regular savings and inheritance I now have around £6000 to play with on behalf of my kids.

What I am trying to work out is;

1. Should I keep all the capital together ?
2. Should I split it 50/50 and save £3000 in each of their names ?
3. Should I put some in ISA's and some in a high interest account ?

Just a little confused for the best. It is a long term thing for Uni or whatever around their respective 18th birthdays.

Any advice greatly received.

Lokolo

Ok well ISAs are for 16+ so you won't be able to open one for them unfortuantely.

There are a number of childrens accounts which give high % of interest (mainly to pull you in so you stay with them when you are older). I don't actually know any specifically - someone will and post them on here.

And its upto you really, you can split 50/50 if you want but make sure they are both getting the same best rate. No point putting £3000 earning 5% and £3000 earning 6%, may as well put £6000 in 6%.

Do you really want to 'play around with it'? If you aren't too bothered you can attempt to put it in some sort of risk investment, but if you would rather not chance it then you just want a savings account.

savingpennies

If you put it in their names then when they reach 16 they have control over it and a 16 year old is not always the best person to suddenly have access to thousands of pounds. My DH and I used some of our cash ISA allowance to save for the kids - so that we control it and can decide when to hand it over.
The other thing to consider is that when the amount of interest in a children's account amounts to £100 then you are liable to pay tax on the interest unless you can prove that the money did not come from you.

Mikeyorks

Have a read through this first :-

http://www.moneysavingexpert.com/savings/child-savings-tax-free

As earlier post .... you can't open ISAs in the name of the children. But you can certainly use your and / or your OH's ISA allowances if you don't already use them?

Has the distinct advantage that the funds stay under your jurisdiction .... until you decide otherwise. The caution in the previous post regarding putting it in your children's names ..... is appropriate. And it echoes words used by Martin in his article on Child Trust Funds :-

The money goes direct to your child. Babes in arms now can grow to be rebellious 18 year olds. The CTF goes straight to them. Your savings for their college fund may be spent in a day on a Playstation, world trip or some darker purpose. It is their money, you can't stop them. Do consider whether you want your child at 18 to have complete autonomy over all this.