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saving for my child- can you help?

(33 Posts)
Castasunder Fri 26-Aug-16 12:50:36

I opened an Isa in my name when my dd was about 2. I save £100 per month in it, sometimes a little more if I can. In that time I've saved almost 6k. It is for my dd.
I decided against putting it in her name as I didn't want her to blow it when she reached 18 ( or is it 16 with an ISA is her name?) . I hope to have saved 10k by the time she is 18.

Wwyd? Continue to save in an ISA in my name? ( I don't understand enough about how they work- when will I get taxed on it?) invest it somewhere else with a better interest rate? ( it's currently rubbish) . It's all I'll ever be able to give her so I really want to make sure she uses it wisely.

TaIkinPeace Fri 26-Aug-16 17:09:25

Savings income is not taxed for the first £2000 any more for basic rate taxpayers.
You have to have a LOT in savings to earn that amount nowadays.
There are no good rates around at the moment
and investing in the stock market is not to be done with money you are likely to need.

Your best bet is to shop around for the best rates and keep moving the money - so long as you earn basic rate you'll have no tax in the coming years.

Castasunder Fri 26-Aug-16 18:08:56

Thanks talk

So I only earn 16k per annum. If it's up to 2000 does that mean the savings will be taxed soon ( or already have been and I haven't noticed?)

TaIkinPeace Fri 26-Aug-16 18:19:00

Hiya,
Nope. The savings will not be taxed unless
- your earnings go into the 40% band (over £37k)
- the SAVINGS income goes over £2k (so you have around £100k in there)

you are free to play the rates game all you like with the money in your name and then pass it to your daughter as and when you wish.

Castasunder Fri 26-Aug-16 18:27:37

Oh right I get you now! Cheers for that
So you recommend keeping it in an ISA? I'll forget my hair-brained ideas of stocks and shares and all that thengrin

TaIkinPeace Fri 26-Aug-16 18:30:46

on your earnings, avoid the stock market as then your capital is at risk

but do shop around for the best high street rates - even if that means taking it out of the ISA

Babelange Fri 26-Aug-16 19:28:28

If this is definitely for your DC and you won't need the money for emergencies then JISA (junior ISAs) have better rates: Nationwide have one at 3.25% (look at www.moneysavingexpert.co.uk for Top JISA rates). I am saving for DCs in their name - it will be their money and I hope to educate them accordingly in money sense.

Castasunder Fri 26-Aug-16 19:31:00

Ok will do. Thanks so much.
Hopefully I'll be able to save way beyond her 18th and actually give her something at an age that really makes an impact, ie for a house deposit. I guess it just depends what direction she takes in terms of uni/travelling/settling down x

TaIkinPeace Fri 26-Aug-16 23:05:11

If the ISA has been in your name you are limited to moving £3k a year into her name
BUT
if you can find a cracking rate its well worth it
3.25 is indeed amazing - check how long it runs for

Castasunder Sat 27-Aug-16 02:21:26

Babe- I am just nervous about her getting her hands on it when she comes of age, and then does something stupid with it. We've all been assholes as teenagers, myself included grin
I want to take advantage of higher rates but just don't know if it's sensible to give that kind of responsibility to a teenager when it comes down to it

copal Sat 27-Aug-16 14:16:57

Be careful about the amount of savings in your name if you're on a low income and/or in insecure employment. If you ever need means-tested benefits (inc housing/council tax while working) the full amount of savings in your name will be taken into account and if it's over £16k they won't allow you to claim anything. Tax credits currently don't consider savings as capital but when the system changes to universal credit in a few years then they will. Child savings in a Junior ISA wouldn't be counted though as it's inaccessible until they're 18.

Castasunder Sat 27-Aug-16 15:13:26

Oh thanks for that- I'm hopefully not going to need them but you never know- I was a single parent for a while and claimed them several years ago and they were a god send.

throckenholt Sat 27-Aug-16 15:31:45

How old is she ?

If it is a long time until she is 18 (or whenever you want to give it to her), then I would split it in two - keep one half in the best standard isa you can get, and put the other in a mixed stocks and shares ISA which has a better chance of making some decent returns of the longer term. The problem with cash ISAs and even worse, savings accounts is that they barely keep place with inflation - so when you finally spend it might not even have the purchasing power it had when you saved it.

I have savings for my kids that they inherited from their gran - I don't really like the stock market gambling (partly because I have so little idea of what to gable on), but have put a portion of their money in a share isa and over 3 years it has increased by 20%, which is far more than any of the other accounts.

Castasunder Sat 27-Aug-16 17:26:51

See that's what I'm talking aboutgrin
I am SO clueless about savings, because basically, I've never managed to save a penny in my life. However , when my dd came along, something clicked and I feel determined to see her right. Or at least help her on the way.
I'm pretty good with money in other respects, as in keeping within my means etc, but I haven't a clue about savings.

Tell me more about this 'share' ISAgrin

Castasunder Sat 27-Aug-16 17:27:15

PS- she's 9

Castasunder Sat 27-Aug-16 17:27:51

PS- she's 9

TaIkinPeace Sat 27-Aug-16 21:03:00

I'm sorry but I cannot support advising a low earner to put money into the stock market.
OP
Do not worry about tax on your savings.
Just bring your DD up to be financially aware and responsible and the whole issue resolves itself

throckenholt Mon 29-Aug-16 16:18:22

Cash savings :
Have a look at www.moneysavingexpert.com/savings/child-savings-tax-free - you can get slightly better savings rates for children - but often they are tied to the parent having an account as well. Sometimes you get more for regular saving.
Once a year review what you have and where and see if there are any better options.

Shares ISA:
I would be tempted to maybe take £1k from the 6K you have already saved and put it in a a stock isa - www.moneysavingexpert.com/savings/stocks-shares-isas
I have one with Hargreaves Lansdown - but I think there are cheaper options. Within the ISA (you chose the place for the ISA, and then buy funds or shares with in it) you can pick funds - there is lots of advice on what the different funds are - but it is pretty confusing. Funds are easier because they manage a basket of investments that cover sections of the market - saves you having to decide if a given company is a good bet or not. www.hl.co.uk/funds - you can use it for research before deciding anything. The favourite funds is a good place to start - also have a look at www.hl.co.uk/funds/help-choosing-funds/master-portfolios - you can see what they recommend for saving for children, and pick your risk level. I really am a complete novice with this - but the one that has done best from the ones I picked is the Lindsell Train Global Equity - includes Diageo, Unilever, Heineken, Walt Disney among others.
Even if you don't go for it now - might be worth having a dig around and educate yourself a bit more about how it works - you might want to do it in a year or two.

throckenholt Mon 29-Aug-16 16:31:30

Meant to say - don't forget the golden rule of paying off debts before messing around with savings - debts cost far more than savings earn generally.
If you are interested in managing your finances better this is a good course that goes through all the basics www.futurelearn.com/courses/managing-my-money (I did it with my young teens).

Castasunder Mon 29-Aug-16 22:08:03

Great post throck...I'm off to do my homework!

CointreauVersial Mon 29-Aug-16 22:13:36

Very timely post, Throckenholt - I was just talking about stocks & shares ISAs with DH, and wondering what's the easiest way to set them up.

SadGuru Wed 31-Aug-16 22:12:52

You may be aware OP, but you are not taxed on any interest you earn from an ISA saving. That applies whether it is Cash ISA or a Stocks&Shares ISA irrespective of the amount of interest your ISA earns.

carrottopper Wed 31-Aug-16 22:16:21

We save for our two children in a junior iSA. I agree about the worth of them blowing it when they get their hands on it. I'm hoping not to tell them about it until I want them to have it but would they automatically find out??

TaIkinPeace Wed 31-Aug-16 22:16:47

sadguru
ISA interest is tax free, but so is that on the vast bulk of normal savings now so ISAs are irrelevant for most basic rate taxpayers

Castasunder Thu 01-Sep-16 21:03:53

I made the silly mistake of telling my dd I was trying to save for her incase she wanted to go to uni when she is older, and now she won't stop banging on about it!grin

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