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  • FIRST POST
    • Zorillo
    • By Zorillo 20th Jan 18, 10:58 PM
    • 162Posts
    • 86Thanks
    Zorillo
    Junior ISA
    • #1
    • 20th Jan 18, 10:58 PM
    Junior ISA 20th Jan 18 at 10:58 PM
    Hello,

    My son is fast approaching his first birthday, and being a much better saver than his dad, has already amassed nearly 1k in his own name.

    He can reasonably expect to save a similar amount every year.

    I would like to invest this money for him, hoping that it will increase in value sufficiently to help him with a major purchase when he's older.

    It is unlikely that in most years he will get particularly close to the limit for investing in a Junior ISA, although there may be windfalls along the way. Rather than dripfeeding small amounts, I am proposing to annually contribute an amount close to 1000 (or more) into a Stocks and Shares Junior ISA and invest that in a global equities tracker fund or similar.

    I see the HSBC Global fund is talked about as cheap and cheerful, and the Vanguard lifestyle funds would also seem to be contenders.

    Can anyone please me any advice on which platform I should base the JISA in order to maximise the limited investment and minimise costs based on the proposed annual deposits, and if any funds are particularly suitable for what I'm aiming to achieve.

    Thanks in advance.
Page 2
    • xylophone
    • By xylophone 23rd Jan 18, 10:36 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    CD
    Sorry - CSD (Charles Stanley Direct).

    Another thought - should your child need means tested benefits at any point in adulthood, he would have to declare any savings held in an ISA.

    How could he do that if he didn't know about them?

    And what would your relationship be like if he found out that you had concealed the existence of his money/ committed fraud by misrepresentation (and that's how the bank would see it) by passing yourself off as him on his account?
    • Zorillo
    • By Zorillo 23rd Jan 18, 10:43 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    All of which supposed I'd actually do it, rather than hypothetically exploring how the transition of account might go from parents to son in the worst possible circumstances, which is all I'm really doing.
    • xylophone
    • By xylophone 23rd Jan 18, 11:10 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    You are just going to have to make up your mind about any gifts to your son and hope for the best.

    Personal gifts to him from friends and relations are his absolutely and should be held in an account in his name.

    You might consider the cash element of a JISA for these?

    https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html

    https://www.gov.uk/junior-individual-savings-accounts
    • Zorillo
    • By Zorillo 23rd Jan 18, 11:22 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    Yes, the intention is for him to have 'some money' in his own bank account for the normal purposes of growing up, learning to save, and spend etc. Whether that needs to be in an ISA or not is a debate for another day.

    The invested money will be for his future as an adult.

    All of the money is his and will always be held in his own name, regardless of whether I've given it to him or others have.

    Which brings me onto another question, the money he has. 'saved' already is in an ordinary children's saving account. In order to get to an investment JISA it will presumably need to pass fleetingly through a (our) current account? Does it then become a gift from his parents regardless of the original source?

    We're not wealthy so here's no actual tax implication either way, I'm just curious.
    • cloud_dog
    • By cloud_dog 23rd Jan 18, 11:36 PM
    • 3,698 Posts
    • 2,192 Thanks
    cloud_dog
    These types of questions pop up quite regularly and there some example of how people manage it.

    Yes, the intention is for him to have 'some money' in his own bank account for the normal purposes of growing up, learning to save, and spend etc. Whether that needs to be in an ISA or not is a debate for another day.
    Originally posted by Zorillo
    Our set up is:
    1. S&S CTF (forerunner to JISA) - Contributed at start, no longer contributing; it is big enough
    2. Savings/current account - in DD name. Any small gifts etc (birthday/Xmas), plus any money earned.
    3. Savings account - in DD name / bare trust. We deposit money in to. DD is not aware of it but it is her money (come 18).
    4. Investment Acc. - in wife's name (for benefit of DD). This is where most of the money is and I manage it from a CGT perspective.
    5. Very recently started a small monthly investment (in an IT) which is designated to either go in to a LISA or a pension (after age 18).

    Which brings me onto another question, the money he has. 'saved' already is in an ordinary children's saving account. In order to get to an investment JISA it will presumably need to pass fleetingly through a (our) current account? Does it then become a gift from his parents regardless of the original source?

    We're not wealthy so here's no actual tax implication either way, I'm just curious.
    Originally posted by Zorillo
    There is an annual JISA allowance but, otherwise there isn't any tax implications for putting all the money through your account and then in to the JISA.

    If you were putting all the money in to a normal savings account then, depending on the amounts involved (and over the years), I would keep records as to where the money came from as there is a 100 interest limit on children's account for money deposited from parents.
    Last edited by cloud_dog; 23-01-2018 at 11:38 PM.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Zorillo
    • By Zorillo 23rd Jan 18, 11:44 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    Thanks Cloud Dog, much appreciated.

    The initial investment will be in a JISA, I think. If it gets "big enough" as you put it, there will be plenty of time for a contingency plan as we grow.
    • xylophone
    • By xylophone 23rd Jan 18, 11:46 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    Which brings me onto another question, the money he has. 'saved' already is in an ordinary children's saving account.
    Will the provider either provide a cheque in your child's name or (easier) make a direct transfer to your child's JISA?
    • Zorillo
    • By Zorillo 23rd Jan 18, 11:50 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    Small gifts currently go via my current account into his, and large ones (will) go into the JISA directly, I hope.

    His regular income is his child benefit being passed on to his bank account, but I don't think we can persuade HMRC to give it to him directly.
    • MallyGirl
    • By MallyGirl 24th Jan 18, 10:03 AM
    • 2,688 Posts
    • 7,692 Thanks
    MallyGirl
    Our set up is:
    1. Cash JISA - started as S&S in my name but transferred value to DD when I wanted to use my ISA allowance for myself.
    2. Savings/current account - in DD name. Any small gifts etc (birthday/Xmas). Pocket money & clothes allowance go in there via SO.
    3. Savings account plus a couple of Regular Savers - in DD name. We deposit 'Child benefit' equiv in. DD is aware of there being 'a secret account' for her but has no idea how much is in any of them. It is her money (come 18) which is in 2 years time.
    4. When she turns 16 next month the basic savings account will no longer be open to her so we will use that to fund the first 2 years of a HTB ISA. Even if she doesn't keep it for the house purchase/bonus the interest rate is decent for cash holding. She could transfer to a LISA at 18 if she wanted to - we will have taught her about the options so that she can make an informed choice then.

    We have a sensible child with uni aspirations so I have no expectation that she will want to blow it all - although it would fund a nice gap year if she didn't get in first time round.
    Also her cousin (4 years older) got a good amount on his 18th - he bought a car but no insurance and got caught driving it while stoned. He lost his licence and job - she knows about that and has no intention of following in his less than admirable footsteps.
    • cloud_dog
    • By cloud_dog 24th Jan 18, 10:16 AM
    • 3,698 Posts
    • 2,192 Thanks
    cloud_dog
    Our DD has been used to being able to 'buy' things since about 3 years old. She used to get the 1p and 2p coins and have a little purse and when we were in a shop and she wanted a chocolate bar (or something) we would ask her for 2p (or similar) from her purse. She would hand it over and have her chocolate bar (whatever).

    In older years, we are talking 6, 7 or 8, it is amazing the things kids think they want until they have to cough up something for it. This saved us no end of hassle in shops.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • MallyGirl
    • By MallyGirl 24th Jan 18, 10:21 AM
    • 2,688 Posts
    • 7,692 Thanks
    MallyGirl
    Linking DD's debit card to her Amazon account (for kindle) instead of charging everything to mine meant her taste switched quite quickly to 'free teen fiction' from whatever I had been paying out for!
    • cloud_dog
    • By cloud_dog 24th Jan 18, 10:30 AM
    • 3,698 Posts
    • 2,192 Thanks
    cloud_dog
    Linking DD's debit card to her Amazon account (for kindle) instead of charging everything to mine meant her taste switched quite quickly to 'free teen fiction' from whatever I had been paying out for!
    Originally posted by MallyGirl
    Our DD is an avid reader although some books need to be physical whilst others can be electronic (I think she has some of my OCD). But, I've never linked our CC/debit card to her Google Play account. We have simply bought Google Play gift cards. My brother linked one of his cards to his kids accounts and oh my, what a mess. The perceived simplicity / removal of effort of buying and adding play cards has been far exceeded by the grief of the usual, unintentional, in game purchases etc.


    EDIT: Sorry OP for going slightly off topic.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • xylophone
    • By xylophone 24th Jan 18, 12:18 PM
    • 25,374 Posts
    • 14,970 Thanks
    xylophone
    His regular income is his child benefit being passed on to his bank account, but I don't think we can persuade HMRC to give it to him directly.
    Do HMRC simply require a sort code and account number for the payment of CB?

    Your child's JISA account will have these - would it be possible just to give the child's account number as the payee account to HMRC?
    • Zorillo
    • By Zorillo 24th Jan 18, 12:24 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    There's a specific reason why that wouldn't work but I'm not ready to reveal that yet.
    • Zorillo
    • By Zorillo 27th Jan 18, 6:18 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    We've gone with an initial 1000 deposit in a Vanguard Junior ISA invested in the Life Strategy 100 fund. I figure if you can't be adventurous when you're less than 1, you probably never will be.

    This will be topped up with the gift from Grandad, and then left alone for approx 12 months before the next deposit, and this is the plan for the next ten years or so.

    Once they're bigger we might to decide to keep more in cash to go towards e.g. cars and driving lessons (if they're still a thing in 2035) which will hopefully act as an incentive to keep the invested money for bigger things.

    Thanks for all the advice.

    P.S. 'My son' is actually twin sons and they have a ISA each
    • Alexland
    • By Alexland 27th Jan 18, 8:05 PM
    • 2,389 Posts
    • 1,791 Thanks
    Alexland
    Wow twins - get ready for mayhem when they start walking! My son did his first steps in his 1st birthday after a few stumbles the day before.

    Once they're bigger we might to decide to keep more in cash to go towards e.g. cars and driving lessons (if they're still a thing in 2035) which will hopefully act as an incentive to keep the invested money for bigger things.
    Originally posted by Zorillo
    Yes you definitely want to consider de-risking the portfolio in the 5-10 years leading up to withdrawal. It's worth considering a switch to a Vanguard Target Retirement fund which will gradually reduce stock market exposure and increase fixed income exposure as the target withdrawal date approaches. It even currency hedges the non-UK bonds (and people say Vanguard are passive...) to reduce foreign exchange volatility. There's a good review here:

    https://pensioncraft.com/review-vanguard-target-retirement-funds/
    Last edited by Alexland; 27-01-2018 at 8:20 PM.
    • Zorillo
    • By Zorillo 10th Feb 18, 8:57 PM
    • 162 Posts
    • 86 Thanks
    Zorillo
    They cause enough mayhem when they're stationary Alex .

    2.5k each from their grandad went into VLS100 today, and that money will buy them 8% more units per than the initial deposit did.
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