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Q&A on how to save for your children's future

(36 Posts)
ShadeMumsnet (MNHQ) Mon 22-Aug-11 11:08:36

We've got Barclays saving expert Andy Gray to answer any questions you have about saving for your children's future and to talk through some of the saving options out there.

Please post your question here by Thursday 25 August and we'll have the answers back for you by 12 Sept.

StarfishM Mon 22-Aug-11 11:38:59

Who offers the best interest rate for monthly contributions for a long term savings account? (thinking ahead to university if fees continue as they are!)

Macey78 Mon 22-Aug-11 11:43:55

we are saving our DD's child benefit/birthday money currently with the co op future fund account have just realised interest rates are poor and moving over to northern rock which pays 3%. How can we maximise her money.

LaWeasel Mon 22-Aug-11 11:55:02

Our first child has a stakeholder Child Trust Fund, which I really like (and is doing well). Are these type of accounts still available privately now the government has stopped doing vouchers?

Who would you recommend? Second child is due soon, we are not in a position to make regular payments, but would like to start with a (very small!) lump sum and then make addition payments as and when (maximum twice a year).

What shares based account would you recommend for my 17 month old? Happy for it to be high ish risk for the moment, want to keep it invested till he's 18 years old, with the money moving into progressively safer investments as he gets older. Thanks!

raspberryhead Mon 22-Aug-11 13:19:30

Would be really interested in savings for children. High, medium and low risk, thinking long term as lo is still a baby. Also interested to learn more about the governments child ISA scheme and whether you think it's any good. Thanks.

missorinoco Mon 22-Aug-11 13:22:35

As asked by LaWeasel re the replacement to CTF. I understand it is coming out in November and is supposed to be better. Would you recommend it, and would you suggest switching from CTF for my children who already have one. Currently I am making small monthly payments into a CTF and hope to do the same into for my baby when I start work again.

NormaSnorks Mon 22-Aug-11 15:22:19

A couple of questions:

1) Can you clarify this whole thing about money given to a child by parents can earn £100 of interest for a child, but after that it's taxed at the parent's marginal rate of tax?
and re. this...
- does 'child benefit' (while it's still around) count as money from the parent (I've saved this since the DC were born...
- how should one account for/ keep records of how much money is given by e.g. aunts/ grandparents into a child's account then?

2)What's the best way to drip feed money into equities for a child - do you need a trust fund? How best not to have returns eaten up in fees?

nilequeen Mon 22-Aug-11 15:33:27

I want to save £100 per month for my daughter (she was born in June of this year). I don't want the money to be available until she's 18 - which account do you recommend?

Shinyshoes1 Mon 22-Aug-11 16:04:10

I have money put aside for my DS's , what happens when they are 18. I don't want them to be wreckless and fritter the money. Can I put it somewhere for them until they are 25 and hopefully more responsible

MJHASLEFTTHEBUILDING Mon 22-Aug-11 20:42:12

Message withdrawn

BumptiousandBustly Mon 22-Aug-11 21:06:23

What is the best way to save for my two children - but still keep it in mine and my husbands names so that we control when they access it (i.e. I don't want them to suddenly have control of the money when they are 18)

CaptainMartinCrieff Mon 22-Aug-11 21:32:49

My DS is only 16 months old and doing incredibly well financially thanks to very generous grandparents. At the moment we invest a bit in his Child Trust Fund and the rest is in a savings account in DS's name but attached to my DH's bank account. Ideally we would like this money to pay for his university education (if he goes) but currently with the way these accounts are set up at 18 years old he will be in for quite a windfall (we aim to have at least £18,000 (not inc. interest i.e. we put away £1000 per year). I dread the thought of him blowing it all on something dangerous like a motorbike! Is there any such account to prevent access of ALL of it at 18. Like maybe we have to give him permission to remove money from the account until say he's 21 or 25? Or do we have to just hope he grows into a sensible, young man and spends it wisely?

Fenouille Mon 22-Aug-11 21:42:56

I read somewhere a suggestion that parents should think about starting a pension for their children. Is this a good idea? How would I go about setting one up if it is?

insertcleverusernamehere Tue 23-Aug-11 11:03:05

Bearing in mind that Barclays in the UK makes most of their money from British homeowners and business owners, what will you be giving back? Will our children be able to access loans at a decent interest rate should they need one to start a business or buy their first home?

bittentothequick Tue 23-Aug-11 12:44:03

I have a pension for my pre-school DD Fenouille. I just picked an ethical fund with low fees but it is probably better to go see a financial advisor really.

orchidee Tue 23-Aug-11 13:24:02

Could you explain in broad terms the main ways for a parent (or other family members) to save for a child's future, explaining the pros and cons of each option, and indicating who each option would best suit.

As with previous comments, I would like to save for my child but am concerned about the implications of saving in his name (pro: interest? con: access?) rather than saving myself and controlling the money (pro: control? con: interest?)

Also, it would be interesting to hear about the account types that are available in a child's name and how they (generally) are operated: e.g. can an adult operate the account and have online access etc, perhaps until the child reaches a certain age?

thank you

Supersunnyday Tue 23-Aug-11 14:15:16

Do you recommend an equity or cash saving option for a child, or a mix?
Cash appeals to us as it's secure in these uncertain times, but on the other hand we don't want inflation to erode the DC's savings.

Presumably children benefit from the same £85,000 FSCS protection as adults?

Are there any indications of what the new child ISA interest rates will be? (Not sure if any providers have made announcements).

SkivingAgain Tue 23-Aug-11 19:21:22

DS1 will be 16 next year. We have been saving for him since he was a baby and his savings account will have about £7k in it when he reaches age 16. I think this is too much for him to be responsible for, so how do we make sure that he can't access it until he starts college/uni or needs it for a car/deposit etc.

BartletForAmerica Tue 23-Aug-11 19:35:21

Do you think there will be an option to change our son's CTF into a Junior ISA in the future? We are concerned that banks and building societies have no incentive to attract new business to their CTFs and that they'll now not be competitive.

Mercedes519 Tue 23-Aug-11 20:17:09

What are the rules for spending money that is in an account with DS's name on it? I understand it is his money but if we needed it to pay the mortgage or something else that isn't directly for him but does benefit him (i.e. Keeping a roof over his head) is this allowed? Would there be tax implications?

And how does the taxman know where the money has come from to enforce the £100 interest cap? Do they just assume it's from parental income? Is it automatic that the whole lot would then be taxed?

aubergine70 Tue 23-Aug-11 20:29:05

My parents have put away quite a lot of money for my DD in her name. I've divorced her father and rewritten my will but can a 9 yo write a will too just in case?

HarrietJones Tue 23-Aug-11 20:35:10

Mercedes- the benefit people expect you to do it.

Only my youngest has a CTF (£50 one from last year) , my elder 2 have children's savings accounts. They have approx £4k each from an inheritance but earning minimal interest, how should they be invested to get max interest ( but low risk as they are likely to need it in6/7 years.

NormaSnorks Wed 24-Aug-11 11:57:11

For those saying 'what to do with a lump sum, without putting it in equities' - NS&I's inflation-linked bond looks like quite a good bet at the moment, and can be opened for children from 7 years old.

Pays RPI + 0.5% (and of course RPI is currently about 4.5% or higher?).

It's for five years, but can be withdrawn after 12 months with a reduced rate of interest. I'm thinking of sticking about £5K for each of the DC into one of these.

Oh, and it's tax free,, so no bother with accounting for whose interest it is...

crazymum53 Wed 24-Aug-11 14:04:46

Can you clarify the differences between a children's account opened by a parent and a grandparent please ?
The building society account we opened for our dd allows her to access her own money when she is 7 years old and transfers to an adult account when she is 16. No other adult (even a parent has access to this money). However the account opened by her grandparents allows them to withdraw money (she has no access) and they say that she won't have access to her money until she is 25. Really don't understand why there are 2 sets of rules - please help?

proudmum74 Wed 24-Aug-11 14:28:00

We're trying to set up some sort of fund to support my disabled baby daughter when she is older, should she be unable to work. What is the most effective way of doing this? Our local barclays bank has talked to us about normal saving accounts, but these don't allow us to save enough in them, or offer enough interest, to provide a realistic level of support. What would you suggest?

HarrietJones Wed 24-Aug-11 15:03:02

Crazymum- is it actually a children's account?

NormaSnorks Wed 24-Aug-11 17:16:19

Sounds like the GP one has been opened in trust or something - don't know much more than that I'm afraid....

crazymum53 Thu 25-Aug-11 09:32:27

I don't know what sort of account it is. I have asked the bank but they say that "in the interest of customer confidentiality" they can't tell me (or my daughter either)!

wahwahwah Thu 25-Aug-11 10:13:47

We have CTF set up and pay £100 pcm - CTFs are ending soon. Best to go into the new ISAs or set up a pension (or both)? When will we know about the childs ISAa? Can we keep the CTF or will the money be moved to another wrapper?

ShadeMumsnet (MNHQ) Thu 25-Aug-11 12:14:47

This thread is now closed to questions. Make sure you check back on 12 Sept for answers from Barclays saving expert, Andy Gray.

HonestlyBanking Sat 27-Aug-11 19:50:24

Why do you charge (along with the other banks) so much for your CTF? The 1.5% is not the total charge as you don't show the TER (total Expense Ration) or the turnover rate of the investments (where you profit each time as well). As a guide you are charge twice the amount a reputable stockbroker would charge for a managed portfolio. Can you tell us your total profit and margin on these products?

BumptiousandBustly Wed 14-Sep-11 07:24:37

Anynews mumsnet? I am really looking forward to the info on this, so just hoping it hasn't been forgotten?

GeraldineMumsnet (MNHQ) Wed 14-Sep-11 09:23:42

Hello, we're just finishing the page with the answers, it should be live later today and we'll post to let you know and link to it.

ShadeMumsnet (MNHQ) Wed 14-Sep-11 12:32:39

Please find saving expert Andy Gray's answers here.

Yawner247 Wed 21-Sep-11 14:47:00

Its taken ages to find this grin now I won't lose it blush

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