Good savings plan for child?

[MrsHelsBels74]

My dad has said that he would like to put aside some money for my sons (one 29 months old, one due in September). I'm not sure if he wants to put away a lump sum or regular savings. We already have a CTF for son but my dad says he wants to put away more than the annual limits for CTF so wants something separate. Obviously I'm happy for him to do this but am a but clueless as to what's the best vehicle for this money? I'm happy to keep out of it as I believe it's between my dad & his grandchildren but he wants us to be involved with any decisions. Any ideas?

[jollydiane]

How about a 'junior ISA'. I think it depends on your view of risk, if you want to make sure the investment is safe but does't earn much interest or if you are willing to take a greater risk and invest in the stock market? If you invest in a junior ISA then the money is tied up until the child is 18 (I think) so it really depends on
a) risk
b) how long you want to invest for
c) level of charges you are willing to pay
d) how much you want to invest (lump sum or regular payments.

Independent sites such as money saving expert will give you a good idea of the highest interest rates if you don't want to place any money in the stock market.

I hope this helps
JD

[shineypenny]

How about premium bonds? I know several people who have them who regularly win the minimum (£25) prize - and you never know, he might win a big prize.
They are accessible and will not depreciate in value.

[CogitoErgOlympics]

I'd also suggest looking at Junior ISAs for the new baby because the older child won't qualify if they have a CTF. The annual limit is £3600 at the moment and there is the choice to go for cash savings or stocks and shares... the latter could be a good option for an 18 year term. Outside of Junior ISAs there are all kinds of managed and tracker funds offering low administration charges that may be a good long-term investment.

Cash deposits and fixed term bonds aren't making very much at the moment but they are relatively safe. If you're happy to move the money around fairly often to take advantage of offers that's always an option.

I'm afraid I don't like Premium Bonds. The payout is fixed to a particular interest rate and, for everyone that wins a prize, there are ten others that win nothing at all. The value of them also depreciates in real terms because of inflation.

[finecheese]

Hi, have just picked up on this whilst trawling the site for ideas to take kids this holidays!
My parents recently invested some cash in a renewable energy scheme (wind turbine) for our kids. Its a long-term investment and the beauty of it is that your return is reliant on the performance of the wind. I like the idea too that it is a community-based investment. They are called Abundance Generation.
Quite a nifty way to save and the kids love the website!

[Alibabaandthe40nappies]

Cogito can you not have a Junior ISA as well as a CTF? Or swap one across?

DS1 has a CTF but not DS2. The CTF is performing hideously and I was thinking of Junior ISAs for them both. Seems unfair that we can't give them an even playing field.

[Pascha]

You definitely can't swap from a CTF to a Junior ISA. It sucks because my son's is rubbish and there's nothing I can do about it except stop paying in any money. I'm just squirrelling it away for now in my own ISA until and unless the government allow people to swap CTFs.

[Alibabaandthe40nappies]

Pascha that is crap. I guess we will just have to save something for him alongside and then make up any shortfall against DS2's Junior ISA.

I didn't even want the CTF for DS1, because by the time we had him it was clear that it was going to be scrapped soon so we knew any future children wouldn't get it. It was automatically created for him though by the lovely Labour Nanny State that we were living under at the time, and seemingly it has negatively affected his savings options for the next 14 years!

Seriously bloody annoying.

[Pascha]

Yep, it totally blows. DS only got the £50 and we put in a little bit ourselves but didn't set up a regular amour because all the financial institutions have given up on them really. Theyre all just maintaining them and not looking out for better investment opportunities because the junior ISAs are the new thing.

[IvanaNap]

Pasha, old thread I know but RE:CTF, can't you just continue to "ignore" that until it comes to maturity (is it when DC is 18?) AND in the meantime set up your own savings / ISA for him?

[mummycbear]

the myfamilclub.co.uk website has a really fantastic guide to helping you chose the right kind of account for children's savings. :-)