Setting up savings for (someone elses) children
Discussion
Our nephew is approaching his first birthday and since their house is stuffed to the gills with noisy, plastic crap he never plays with and his parents aren't particularly financially savvy, we thought we'd start something off for his future, perhaps allowing him to buy his first car when he turns 17.
We only want to contribute on birthdays, Christmas etc.
We'd like to give £20-£100 per contribution, and see reasonable growth over the next decade and a half, we're not completely risk averse but we'd like there to be a low probability of losing the lot.
Any ideas on what's available for relatives to set up for kids other than Premium Bonds?
We only want to contribute on birthdays, Christmas etc.
We'd like to give £20-£100 per contribution, and see reasonable growth over the next decade and a half, we're not completely risk averse but we'd like there to be a low probability of losing the lot.
Any ideas on what's available for relatives to set up for kids other than Premium Bonds?
Have a chat to your local bank manager, they should be able to give you some advice, my OH did it for our grand-daughter, but she cant find the paperwork, and is not sure if its in her name, or our grand-daughters name.
Tell a lie, just checked the bank statements, its through the Halifax.
Tell a lie, just checked the bank statements, its through the Halifax.
Edited by Vipers on Monday 8th March 14:51
If they don't have one already, go and get a Child's Trust Fund.
The government gives you £250 toward the kid just for setting it up.
You can then add up to £1,200 every year.
No point not having the £250, it's free money.
Only downsides are: I think some of it has to be in equities so more risky than bonds.
Also, the kid gets full control at age 18, so it is likely to be blown on something idiotic, but that might be better than plastic crap x18 and you never know, he might pay for university or something.
The government gives you £250 toward the kid just for setting it up.
You can then add up to £1,200 every year.
No point not having the £250, it's free money.
Only downsides are: I think some of it has to be in equities so more risky than bonds.
Also, the kid gets full control at age 18, so it is likely to be blown on something idiotic, but that might be better than plastic crap x18 and you never know, he might pay for university or something.
His parents were muttering something about the child trust fund but I know they haven't set anything up yet (as I said, financially astute they 'aint). Looks like they have to do it though so I'm going to assume it doesn't get done.
Which is a shame, because tax free cash at 18, contributed to by us on a regular basis but with no commitment would be ideal for what we want for him.
I'll push them a bit on it I think.
Which is a shame, because tax free cash at 18, contributed to by us on a regular basis but with no commitment would be ideal for what we want for him.
I'll push them a bit on it I think.
£250 x 1.07 (7% is the historical average stockmarket return) ^18 (compounded for 18 years) is £845.
Free, not just tax free!
Tell his parents they are robbing their kid of nearly a grand! And they will end up having to foot the bill in any case.
If you give £50 every year and it compounds at 7% as well, then your £900 contribution will amount to roughly £1,700.
£2,500 will probably go a reasonable way to a first car even in 2028!
Kick them up the arse! Even offer to fill in the forms, they are very short. F&C do a reasonable one IIRC.
Also, make sure you do it before the election because I think these are one of the things the Tories want to kill.
Free, not just tax free!
Tell his parents they are robbing their kid of nearly a grand! And they will end up having to foot the bill in any case.
If you give £50 every year and it compounds at 7% as well, then your £900 contribution will amount to roughly £1,700.
£2,500 will probably go a reasonable way to a first car even in 2028!
Kick them up the arse! Even offer to fill in the forms, they are very short. F&C do a reasonable one IIRC.
Also, make sure you do it before the election because I think these are one of the things the Tories want to kill.
Watch the fees with Child Trust Funds....I set one up for my son with the £250 voucher through The Childrens Mutual. They get very good reviews but 5% of initial investment. Ouch!
http://www.thechildrensmutual.co.uk/child-trust-fu...
I also set up a pension for my son (sounds daft I know)...but you get basic rate tax relief on it. If you use a good provider it's much cheaper to administer than a CTF though obviously the child can't get it when they are 18. I've taken the view that it will hopefully give my a big head start on his pension and mean he wont have to worry about it quite as much....the power of compounding when you have a 25 year head start on most people is pretty good!
http://www.thechildrensmutual.co.uk/child-trust-fu...
I also set up a pension for my son (sounds daft I know)...but you get basic rate tax relief on it. If you use a good provider it's much cheaper to administer than a CTF though obviously the child can't get it when they are 18. I've taken the view that it will hopefully give my a big head start on his pension and mean he wont have to worry about it quite as much....the power of compounding when you have a 25 year head start on most people is pretty good!
Beardy10 said:
Watch the fees with Child Trust Funds....I set one up for my son with the £250 voucher through The Childrens Mutual. They get very good reviews but 5% of initial investment. Ouch!
I noticed this. I've recommended the F&C stakeholder fund, it's fees are capped at 1.5% and it spreads the investment using an all share tracker - OK he might not get spectacular returns in 18 years, but he shouldn't be left penniless either.I called them last night and they assure me they're going to sort it out in the next couple of days - when I reiterated the figures above it seemed to spur them into action (especially when I told them I would remind him on his 18th birthday what he'd missed out on because his parents couldn't be bothered to set it up for him).
Thanks for the advice (and good one on the pension, my wife started hers at 18 and it's made a huge difference to what she'll hopefully get in retirement).
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