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Isambard

Childs Isa Or Savings

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I have a one year old and boy and I have decided that I want to start up a savings plan - even a bank account (not sure on that)

I am not that well off but I am thinking of putting in £50 a month into an ISA instead of putting money away in a savings account as you get low interest and the inflation will eat away at whatever that I put into it.

Got a couple of questions - is there a standout option for me. A quick google sees NatWest offering something OK with decent rates. I also want the option that if I get into financial dire straits I can pause\halt\stop payments.

The only disavantage with the ISA is that my boy can only access it at 18 and of course he can do what he wants with the money as its entirely his (so if he wants to go travelling around the world thats up to him!)

Anybody been in a similar position and can advise?

Might even do one myself! Seems the best way of saving!

Cheers

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Do you have your own shares ISA? Consider putting money in a shares ISA for yourself and then, at age 16, 18 or 21, you can cash it in tax free and give him a hunk of cash. Over 18 years those shares should do very well.

This way you could combine the money you are saving for yourself and for him in one tax efficient envelope. It would also be fully in your control so that, for whatever reason in the future, you would be fully in control of it.

Your could either buy a managed share ISA or do a self-select one via someone like Selftrade.

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Yes, you can stop paying in when you wish. You could drip money in monthly or a lump sum each year.

If you are going to buy a managed shares ISA make sure that you buy one via one of the online ISA supermarkets - and not direct with the firm - as you get better deals on the commission that you have to pay the firm in question.

I would look for a good fund manager. Neil Woodford, for example, is someone considered with a good track record. The problem is that someone who was good for the last 10 years might be hopeless in the next 10 years.

Consider also where you wish to invest - in just UK shares or in something with perhaps a more global reach such as US shares and some European shares as examples. Over the longer term US tech shares tend to perform very well so that might be something to consider - i.e. a fund which invests in US tech shares - but probably would have a couple of booms and busts over 18 years.

I would personally hold off for a few months from setting one up as stock markets are at crazy highs at the moment and we are probably due for a correction. But now is a good time to do some research and work out which fund you would wish to invest in, the most cost effective way (i.e. via one of the online fund supermarkets.), and how much you wish to put in monthly.

If there is a big crash now in stocks in the Autumn and the BBC News is full of end of the world stories that probably will be the best time to start investing.

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Thanks Masked tulip - To be honest I want something relatively safe as its my childs money - of course I would love to double my money or whatever but all I really want is consistent gains over a year.

Cheers

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I've just opened a S&S ISA for my newborn son, and we're drip-feeding in £50-£100 every month.

I've got the Regular Investment set up to buy £300 worth of SWDA (a global index tracker ETF), which means that it won't buy until there's at least £300 in the account. I've done this to keep the charges down as a percentage, as it's a fixed fee of £1.50 through Regular Investment.

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Good advice from TMT

If you have any debts clear those first. My sister came to me for advice on children's ISA savings and I told her to concentrate on their £1.5million mortgage instead she declined and opted to pay £200 a month into a HL children's ISA (Neil Woodford fund at my recommendation).

Look after your own savings first and gift to children second.

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Thanks Masked tulip - To be honest I want something relatively safe as its my childs money - of course I would love to double my money or whatever but all I really want is consistent gains over a year.

Cheers

A year is too short a time to invest. Medium (5yr) or long term (10) which fits in nicely with young children now becoming adults later on. If you're dripping £50 a month and the market corrects <30% after two years say then consider any further purchases are at a discount bringing your averages down. A fund like Neil Woodford operates spreads the risk across a portfolio of assets which you couldn't do yourself without having substantial capital behind you. It also benefits from having the brightest people doing research and having access to data that us mere mortals don't possess.

All cash is the worst position to hold as that'll simply be eroded by inflation.

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You have a long time frame, so you want to look for growth. If you pay in to a single fund (which makes sense if you're dribbling in a regular small amount like £50/month) I'd suggest a global one. Either a tracker or a managed fund with strong management and track record.

Wouldn't touch Woodford myself: there are more ethical managers out there running mainstream funds with strong track records. For example, Scottish Mortgage (Investment trust), or Lindsell Train OEIC (the modern version of Unit Trust).

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All cash is the worst position to hold as that'll simply be eroded by inflation.

Something weirdly odd that simply saving money isnt a good idea - perverse even- anyone agree.

Take your point about debts (i have none) but i dont have any savings (being worked on)

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The reason I suggested you do an ISA in your own name is that you get to completely control the money.

The child you adore MIGHT go off the rails around the time their ISA is eligible for them to take the cash out and they could p*as it all on that boyfriend or girlfriend that they are going through a phase with. Or they could just walk out on you - it happens.

My suggestion gives you far more control and allows you to build up a nest egg in case of any future emergencies.

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I'll admit I decided to distrust my newborn and just pool the nominal money in my own ISA. Not quite sure how I'll detangle the random proportions when she is 18. I went with Fundsmith who has had a pretty amazing run the last few years, so providing he can deliver his 20% annual growth for the next 15 years (!) we will be quids in.

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Something weirdly odd that simply saving money isnt a good idea - perverse even- anyone agree.

Take your point about debts (i have none) but i dont have any savings (being worked on)

My savings strategy has been 6months living expenses or 10% of total fund held in cash whichever is greater and until recently 5% held in precious metals but that's now been liquidated to pay for next terms school fees.

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Just wish I had enough disposable income to save 6 months living expenses. I doubt very many people have that in this country - I really need to start saving there always seems something that needs to be bought! :)

Great advice on here - I think I will do it in my name actually -

Cheers

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Don't forget, 18 to 21 years is a long time. You have an opportunity for a lot of growth in that time.

I know what you said about wanting it save but you also want growth. Seriously consider a fund with some kind of exposure to US tech and US biotech as they will be the main drivers for the next 20 years at least IMPO.

Don't forget, people who put money in so-called safe shares like Tesco, M&S, etc have done pretty badly in recent years.

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Just wish I had enough disposable income to save 6 months living expenses. I doubt very many people have that in this country - I really need to start saving there always seems something that needs to be bought! :)

Great advice on here - I think I will do it in my name actually -

Cheers

Yes with the high cost of housing in the UK it is a rarity for people to have those type of savings. It was the norm for my parents generation. With that in mind and it not being feasible I'd recommend you save £40 and spend <£10 a month on a life insurance policy. My £7.82 buys me £120,000 of protection that stops at aged 50 when both my children are over 16 years old. I figured they'll be young adults by then and able to fend for themselves.

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Don't forget, 18 to 21 years is a long time. You have an opportunity for a lot of growth in that time.

I know what you said about wanting it save but you also want growth. Seriously consider a fund with some kind of exposure to US tech and US biotech as they will be the main drivers for the next 20 years at least IMPO.

Don't forget, people who put money in so-called safe shares like Tesco, M&S, etc have done pretty badly in recent years.

I've not done too badly holding Sainsbury's shares recently although I reduced my holding from 7,500 shares to 2,500 when they were last at £2.90. It's still a good dividend payer and a defensive stock in the traditional sense of the word so a long term hold/accumulate for me.

I'd agree with you that biotech and tech is the growth play for the future.

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Papers don't half trip you out about these things, when you're also so priced out of housing, and way off track with your own pension.

Weekend paper: Money

Quote

 

The amazing answer is that if £340 was paid into the account every month, and it was invested in the stock market and left untouched, the child could receive a cool £1m on their 37th birthday.   A fantastic boost when they may be juggling a mortgage and young children of their own.

.... cash analysis uses 3.25% interest rate , the current best Junior Isa available from --------- building society.  ...stocks and shares Isa assumes 1% annual fee levied, dividends reinvested and uses the historic returns from the FTSE All-Share... since its inception in 1962, the All-Share has generated and annual 6.9% annual return on average, plus a 3.8% annual dividend yield.

....One twin accumulates £100.891 in the --------- building society Isa and by the time they reach adulthood, thanks to generous friends and family contributing the maximum amount each month.  But his twin sister has a stocks and shares Isa, and amasses double, £193,729, provoking serious sibling jealousy.

.....Mould also says: "Where possible, buy accumulation (acc) units in funds for your junior Isa, rather than income (inc) ones, as the accumulation units reinvest dividends for you.

 

 

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Piss all your money up-the-wall and leave your kids nowt.

Trust me - you really are doing them a favour in the long-term...

 

XYY

                                                                                                               

The dog's kennel is not the place to keep a sausage - Danish proverb

 

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I do 60 a month each for the little spysters.

They each got a few grand from various relatives when they were born. By few i mean about 4k each.

At the tender age of 10 the oldest has about 18k to his name. Hes wealthier than a lot if people in the pub.

Look at fees rather than any claimed performance.

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On 01/09/2016 at 0:48 PM, longtomsilver said:

Yes with the high cost of housing in the UK it is a rarity for people to have those type of savings. It was the norm for my parents generation. With that in mind and it not being feasible I'd recommend you save £40 and spend <£10 a month on a life insurance policy. My £7.82 buys me £120,000 of protection that stops at aged 50 when both my children are over 16 years old. I figured they'll be young adults by then and able to fend for themselves.

Hunger games? You are a hard father!:o

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48 minutes ago, spyguy said:

I do 60 a month each for the little spysters.

They each got a few grand from various relatives when they were born. By few i mean about 4k each.

At the tender age of 10 the oldest has about 18k to his name. Hes wealthier than a lot if people in the pub.

Look at fees rather than any claimed performance.

Some slapper from South Bank will soon liberate that cash from him once you're sitting in the corner of the retirement home for ex-MI5 operatives who stink of piss and can't control their bowels...!

;)

 

XYY

                                                                                                               

The dog's kennel is not the place to keep a sausage - Danish proverb

 

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