Junior/child ISA - preparing for the future
Discussion
5 weeks ago we had a sproglet. First one.
Hence why I'm up and posting this at 2am.
Whilst we're not absolutely flush with bags of cash, i think were doing ok. I'm fairly terrified that in another 20years everything will be a magnitude less affordable than now.
I don't really have any interest in finances/money but would welcome thoughts on opening a junior ISA for little one so that when she is 18 she has a bit of a boost in life to do as she pleases.
For the last three years I have been diverting monthly mortgage overpayments into a vanguard managed 100% equity fund and it's been doing really well IMO. I dont have the knowledge, time or inclination to control everything myself so paying into a managed fund seems like a low maintenence and reasonably successful way to go (if I keep up the investments and it doesn't absolutely crap out then i should be mortgage free by the time I'm 40, in 5 years time)
Back to sprog:
If i plopped (for example) £5k into one of these now and topped it up with say £50/m, by the time she's 18 it should have grown into a fairly considerable chunk of cash.
Are there better/cheaper/more suitable alternatives that aren't riddled with ridiculous amounts of risk? Obviously £5k in bitcoin 15years ago would see all living relatives through to the end if their days but unfortunately crystal balls like that don't exist.
Hence why I'm up and posting this at 2am.
Whilst we're not absolutely flush with bags of cash, i think were doing ok. I'm fairly terrified that in another 20years everything will be a magnitude less affordable than now.
I don't really have any interest in finances/money but would welcome thoughts on opening a junior ISA for little one so that when she is 18 she has a bit of a boost in life to do as she pleases.
For the last three years I have been diverting monthly mortgage overpayments into a vanguard managed 100% equity fund and it's been doing really well IMO. I dont have the knowledge, time or inclination to control everything myself so paying into a managed fund seems like a low maintenence and reasonably successful way to go (if I keep up the investments and it doesn't absolutely crap out then i should be mortgage free by the time I'm 40, in 5 years time)
Back to sprog:
If i plopped (for example) £5k into one of these now and topped it up with say £50/m, by the time she's 18 it should have grown into a fairly considerable chunk of cash.
Are there better/cheaper/more suitable alternatives that aren't riddled with ridiculous amounts of risk? Obviously £5k in bitcoin 15years ago would see all living relatives through to the end if their days but unfortunately crystal balls like that don't exist.
Edited by Ambleton on Wednesday 22 January 03:06
I use Fidelity Junior ISA for this. Broad range of funds and no share dealing fees so you can chuck in £50/100 when you have it plus a regular direct debit. It does add up. Ours are spread between FTSE 250, S&P 500, Emerging Markets and a bit in a property fund. Simple enough platform to use. I presume others do similar but I find that works well for us and it sounds like you're looking for the same thing.
I do the same, but with AJBell.
I went VWRL for a low cost 100% equities tracker. Personally I think the investment risk over the timeframe is far lower than the risk child goes spending mad when they hit 18! Though I hope some guidance will stop that.
Might you have a second child? I was a bit too generous with the first and now find myself begrudgingly curtailing my fun spend to even it up
I went VWRL for a low cost 100% equities tracker. Personally I think the investment risk over the timeframe is far lower than the risk child goes spending mad when they hit 18! Though I hope some guidance will stop that.
Might you have a second child? I was a bit too generous with the first and now find myself begrudgingly curtailing my fun spend to even it up
Thanks both,
Will take a look but by the sounds of it I'm in the right ball park.
I think we'll only have the one. It's been a bumpy road to get here and the wife had a reasonably unpleasant pregnancy and birth but certainly something to think about.
Will take a look but by the sounds of it I'm in the right ball park.
ILikeCake said:
Might you have a second child? I was a bit too generous with the first and now find myself begrudgingly curtailing my fun spend to even it up
Ooh ouch, yes I can well imagine that could well be painful! I can easily see how that could happen too! I think we'll only have the one. It's been a bumpy road to get here and the wife had a reasonably unpleasant pregnancy and birth but certainly something to think about.
From HMRC website:
There are 2 types of Junior ISA:
1- a cash Junior ISA, for example you will not pay tax on interest on the cash you save
2- a stocks and shares Junior ISA, for example your cash is invested and you will not pay tax on any capital growth or dividends you receive
Your child can have one or both types of Junior ISA, but can only have a maximum of one of each type.
ETA:
The NS&I junior ISA is a cash ISA. So you could open a stocks and shares ISA as well to have a bit more variation on risk/reward.
There are 2 types of Junior ISA:
1- a cash Junior ISA, for example you will not pay tax on interest on the cash you save
2- a stocks and shares Junior ISA, for example your cash is invested and you will not pay tax on any capital growth or dividends you receive
Your child can have one or both types of Junior ISA, but can only have a maximum of one of each type.
ETA:
The NS&I junior ISA is a cash ISA. So you could open a stocks and shares ISA as well to have a bit more variation on risk/reward.
Edited by Ambleton on Wednesday 22 January 08:15
I had a Nutmeg S&S ISA a while back so I started a JISA with them alongside it for my first child in there. That's more of a managed fund, where you can only set a risk rating. I've debated moving out and gaining more control of the allocation, but it returned a very reasonable 13% last year so leaving it alone for now - if it ain't broke don't fix it.
When the second child came along I opened an S&S JISA with Hargreaves Landown, they don't charge anything. I went with 50:50 S&P 500 tracker and world index tracker. By no means perfect but low cost and can sit there for 18 years and do its thing.
I've also got a fixed rate savings account for cash for them - in my name so I pay the tax on the interest (my gift to them!), at the time (and still the case) opening a cash JISA at rate even close to competitive just wasn't possible. Once the balance starts to approach the annual deposit limit I might reconsider. Before then, when it matures it's going to an account in my wife's name as she has a higher personal allowance so won't need to pay tax.
As said above, giving them the means is one thing, what they do with it is quite another. It's on me to ensure they are sensible when the time comes.
When the second child came along I opened an S&S JISA with Hargreaves Landown, they don't charge anything. I went with 50:50 S&P 500 tracker and world index tracker. By no means perfect but low cost and can sit there for 18 years and do its thing.
I've also got a fixed rate savings account for cash for them - in my name so I pay the tax on the interest (my gift to them!), at the time (and still the case) opening a cash JISA at rate even close to competitive just wasn't possible. Once the balance starts to approach the annual deposit limit I might reconsider. Before then, when it matures it's going to an account in my wife's name as she has a higher personal allowance so won't need to pay tax.
As said above, giving them the means is one thing, what they do with it is quite another. It's on me to ensure they are sensible when the time comes.
I had similar considerations when mine arrived and ummed and ahhed about the right course of action.
In the end, I concluded that it only really makes sense to make use of a child ISA once you have your own ISA(s) full each year. i.e. If you are putting 20K into yours (and your partner's) ISA, then you might decide to put any spare change into the child's ISA.
If you aren't filling your own, then it makes more sense to put any spare cash into your own ISA / pension, than it does the kids. This way you still get the benefit of tax free growth for 18 years, and you get to decide what to do with it in the future.
And if you end up taking it all out to pay for uni or a house deposit when the time comes, then great. IHT changes might alter this thinking a bit, but probably not for most of us.
I'm still choosing this option. i.e. Aim to max my tax free saving first. Any money the kids receive (which is relatively small amounts in our case) goes into a high interest savings account
In the end, I concluded that it only really makes sense to make use of a child ISA once you have your own ISA(s) full each year. i.e. If you are putting 20K into yours (and your partner's) ISA, then you might decide to put any spare change into the child's ISA.
If you aren't filling your own, then it makes more sense to put any spare cash into your own ISA / pension, than it does the kids. This way you still get the benefit of tax free growth for 18 years, and you get to decide what to do with it in the future.
And if you end up taking it all out to pay for uni or a house deposit when the time comes, then great. IHT changes might alter this thinking a bit, but probably not for most of us.
I'm still choosing this option. i.e. Aim to max my tax free saving first. Any money the kids receive (which is relatively small amounts in our case) goes into a high interest savings account
fat80b said:
I had similar considerations when mine arrived and ummed and ahhed about the right course of action.
In the end, I concluded that it only really makes sense to make use of a child ISA once you have your own ISA(s) full each year. i.e. If you are putting 20K into yours (and your partner's) ISA, then you might decide to put any spare change into the child's ISA.
If you aren't filling your own, then it makes more sense to put any spare cash into your own ISA / pension, than it does the kids. This way you still get the benefit of tax free growth for 18 years, and you get to decide what to do with it in the future.
And if you end up taking it all out to pay for uni or a house deposit when the time comes, then great. IHT changes might alter this thinking a bit, but probably not for most of us.
I'm still choosing this option. i.e. Aim to max my tax free saving first. Any money the kids receive (which is relatively small amounts in our case) goes into a high interest savings account
That makes sense in theory. I much prefer having a separate "pot" for the kids though which can't be touched for anything else. Also when relatives gift them little bits of money it goes straight in there and it's going where they intended. In the end, I concluded that it only really makes sense to make use of a child ISA once you have your own ISA(s) full each year. i.e. If you are putting 20K into yours (and your partner's) ISA, then you might decide to put any spare change into the child's ISA.
If you aren't filling your own, then it makes more sense to put any spare cash into your own ISA / pension, than it does the kids. This way you still get the benefit of tax free growth for 18 years, and you get to decide what to do with it in the future.
And if you end up taking it all out to pay for uni or a house deposit when the time comes, then great. IHT changes might alter this thinking a bit, but probably not for most of us.
I'm still choosing this option. i.e. Aim to max my tax free saving first. Any money the kids receive (which is relatively small amounts in our case) goes into a high interest savings account
I've got Nutmeg JISA's for my kids. As above did circa 13% last year with no input which seems reasonable.
I do worry a bit that they'll blow it at 18 and debated just keeling everything in my account.
Hoping they'll be sensible enough to leave it be until they can use it for something sensible.
I do worry a bit that they'll blow it at 18 and debated just keeling everything in my account.
Hoping they'll be sensible enough to leave it be until they can use it for something sensible.
Once my grandchildren reach 3 years old I open a sas jisa for them held in my portfolio, I deposit 3k in their birthday and set up a 100 quid a month dd, oldest has just turned 6 and its up to 9k, should be a pretty chunk of about 50k when he's 18, got to hope he's wise enough to not piss it down the drain though :-0
fat80b said:
I had similar considerations when mine arrived and ummed and ahhed about the right course of action.
In the end, I concluded that it only really makes sense to make use of a child ISA once you have your own ISA(s) full each year. i.e. If you are putting 20K into yours (and your partner's) ISA, then you might decide to put any spare change into the child's ISA.
If you aren't filling your own, then it makes more sense to put any spare cash into your own ISA / pension, than it does the kids. This way you still get the benefit of tax free growth for 18 years, and you get to decide what to do with it in the future.
And if you end up taking it all out to pay for uni or a house deposit when the time comes, then great. IHT changes might alter this thinking a bit, but probably not for most of us.
I'm still choosing this option. i.e. Aim to max my tax free saving first. Any money the kids receive (which is relatively small amounts in our case) goes into a high interest savings account
This is the route I chose - I wouldn't have trusted 18 year old me with any significant amount of money, and despite my best efforts, I can't see either of my lads being any better. However my wife has also set up children's savings accounts in their names, and is paying the same amount as me monthly, so they will have access to this sooner, albeit with much less growth than the investments I have picked.In the end, I concluded that it only really makes sense to make use of a child ISA once you have your own ISA(s) full each year. i.e. If you are putting 20K into yours (and your partner's) ISA, then you might decide to put any spare change into the child's ISA.
If you aren't filling your own, then it makes more sense to put any spare cash into your own ISA / pension, than it does the kids. This way you still get the benefit of tax free growth for 18 years, and you get to decide what to do with it in the future.
And if you end up taking it all out to pay for uni or a house deposit when the time comes, then great. IHT changes might alter this thinking a bit, but probably not for most of us.
I'm still choosing this option. i.e. Aim to max my tax free saving first. Any money the kids receive (which is relatively small amounts in our case) goes into a high interest savings account
HL junior isa (stocks and shares) here. As per others, just a regular amount in via direct debit, grand parents wanted to chip in a little too instead of regularly buying her nonsense ‘stuff’.
invested into a couple of different low cost funds, but as others have said- can’t really go wrong with vanguard global type funds.
I have started to get a bit more worried about the potential pot size that my daughter will have access too at 18. But balance that off with it being my responsibility to hopefully give her some education on money/ saving/ spending.
and if I don’t, well she’s gonna have an amazing time blowing it on drink/ drugs/ travel/ silly cars/ handbags…… actually maybe not, in 10yrs time she might only be able to afford 3 pints and a mcdonald’s.
invested into a couple of different low cost funds, but as others have said- can’t really go wrong with vanguard global type funds.
I have started to get a bit more worried about the potential pot size that my daughter will have access too at 18. But balance that off with it being my responsibility to hopefully give her some education on money/ saving/ spending.
and if I don’t, well she’s gonna have an amazing time blowing it on drink/ drugs/ travel/ silly cars/ handbags…… actually maybe not, in 10yrs time she might only be able to afford 3 pints and a mcdonald’s.
Surprised to read people worried about them blowing it at 18. Are you intending to simply hand them the cash on their birthday?
I was thinking more of holding onto it until they're ready for a house deposit. Possibly an exceptional university place (eg. Medicine at Harvard) though I tend to think part time study while working is a far better route in lost cases. Cars and gap years definitely not.
I was thinking more of holding onto it until they're ready for a house deposit. Possibly an exceptional university place (eg. Medicine at Harvard) though I tend to think part time study while working is a far better route in lost cases. Cars and gap years definitely not.
JuanCarlosFandango said:
Surprised to read people worried about them blowing it at 18. Are you intending to simply hand them the cash on their birthday?
I was thinking more of holding onto it until they're ready for a house deposit. Possibly an exceptional university place (eg. Medicine at Harvard) though I tend to think part time study while working is a far better route in lost cases. Cars and gap years definitely not.
But the point is it becomes wholly and irrevocably theirs at 18, so if they do want to go and piss it up the wall you can't even access the account any more to stop them. Unless you start threatening to kick them out or whatever else.I was thinking more of holding onto it until they're ready for a house deposit. Possibly an exceptional university place (eg. Medicine at Harvard) though I tend to think part time study while working is a far better route in lost cases. Cars and gap years definitely not.
Over the last year or so I've seen the son of a good mate do just that on his gap year, and temporarily veer pretty far off the rails as a result. It's been food for thought as my eldest's has been running for almost 15 years (initially as a CTF), and simply contributing the max every year and sticking it in boring trackers means it's now sitting at a shade under £200k. He's pretty smart and level-headed for his age, and I've long since begun the process of educating him on investing and broader financial matters, so I'm reasonably confident he'll just leave it alone and/or give it to me to manage when he turns 18. But when dealing with someone at that age you can never be entirely sure of anything...
NowWatchThisDrive said:
But the point is it becomes wholly and irrevocably theirs at 18, so if they do want to go and piss it up the wall you can't even access the account any more to stop them. Unless you start threatening to kick them out or whatever else.
Indeed. I’m not sure I’d be that comfortable giving “me at 18” the access to a decent level of cash. Despite being a somewhat sensible 18 year old, I’d probably still have made a poor choice..
I had a post office account with £1500 and that got spent/wasted.
I was at uni with a girl who gained access to her $4M trust fund at 21 and that was some party !
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