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Junior Isas, Regular Saving and Bears, oh my!(12 Posts)
Hoping for advice from someone more financially savvy than me (not hard)!
DS10 has a Child Trust Fund which I pay into monthly
DD4 arrived too late to access CTF, and due to crapness on my part doesn't have any regular savings which now I need to sort out.
My DM has said that she wants to make a financial gift to each DC - very lucky for them and generous of her - so now I need to get organised.
I gather Junior ISAs have replaced the CTF - so I should set one up for DD. Should I also transfer DSs CTF to a Junior ISA and carry on saving into that?
Both CTF and jISAs have a max limit per year for paying in which will be under the value of DMs gift. Should I therefore set up savings accounts for each of them - suspect so - and in that case am I better off getting regular saving accounts or one of the array of other options which are making my head spin? I'd really like any gifts and any money I save for them to be held for their future so don't want to take it out before they're adults.
I'd massively appreciate any advice from anyone who's already trodden this path!
Yep, it's the most boring thread in the world, but...
I would look at moving CTF to Stocks & Shares Junior ISA as your timescale for eldest child is 7 and a bit years, youngest is 13 and a bit years.
Fidelity, AJ Bell, Hargreaves Lansdown and others offer these accounts and the fees vary depending how often you are adding money (dealing fees for buying funds).
As your youngest does not have a CTF to transfer, you could use Vanguard for a JISA.
Have a look at cost comparison tables such as: https://moneytothemasses.com/quick-savings/parents/best-junior-stocks-and-shares-isa
The underlying investment could be a global multi asset fund, or a global equities tracker. To get a return on the money risk needs to be taken, so spend a little while learning about risk and how global funds spread the money across many thousands of company shares.
I would transfer the CTF to a JISA as there are very few CTF providers now and as I found out myself the fees may be very high compared to a JISA.
Oh oh oh! I had given up on replies! Thank you very much. I will turn the CTF into JISA, open a second one for DD and look into savings- not sure quite that the lowish monthly savings saving can afford following the one-off gift will really merit something as grand as a global multi-asset fund, but then I know very little about this and will read your link with interest nannynick to learn more.
I finally got this sorted this year.
We have three children and I save monthly to Halifax kids saver which pays 3.5% interest. Maximum contribution monthly is £100. At the end of the year it gets moved into another account with terrible interest rates so next year I'll need to decide what we'll do with it. Potentially we'll add it to the kids stocks and shares junior ISAs which they all have with Vanguard. My eldest also has an account with Santander 123 mini which pays 3% on the first £2000.
the others will get one of these once they're old enough. You have to be 13 or if you bank with Santander already they can have one younger than that.
To add to the above I have current accounts for all of them into which birthday and Christmas money is paid. This is money they are allowed to spend. So if they want something but it's a want and not a need they can pay for it. I've found this useful now they're older because they mostly get cash for presents these days. They all have a rough idea how much they have in their current accounts but they don't really know about the rest.
Yes even small regular savings will merit something as grand as a multi- asset fund. Some platforms, HL for example, will allow you to save as low as £25 a month into a fund, with no buying costs. In fact, this is an excellent way of diversifying small amounts of money, and even small amounts of money compound over time.
If your mums money will max out a JISA for the year, you could hold some back and add it next year (or move from regular savings). You could also drip feed regularly over the year - this is a strategy to even out peaks and troughs in case you buy at the top.
Another thing you could consider is starting a pension for them. Because of the time frames, starting a pension very young and investing regular amounts can grow incredibly due to the long compounding. They would see the benefit long into the future.
This is very helpful, thank you. Also slightly intimidating in that it demonstrates the depths of my ignorance about this stuff (I am a grownup, with a responsible job, really!).
Alcesalces I like the idea of the current account for gifts - we've only just made it to a Go Henry card for DS10 so this feels like the next step. I'm pretty sure I'd fail to move their savings accounts to take advantage of different interest levels in different years so would be better off getting them set up in one reasonable if not stellar place for the savings - just aware of my limitations on this one.
Thanks Starface I hadn't thought of holding some back for a second ISA payment next year, that's a good idea. And a pension!! Definitely wouldn't have thought of that, but yes, I see the merit in giving it as long as possible to grow. Ok, so I'm adding global multi-asset funds to the investigation list; I'd be looking to save £50/mo each going forward which I know is very small by many people's standards but hopefully will still build up.
Thus week I'm going to get brave and pick the plan. I'm really grateful for the advice on here
£50 per month is plenty to build a very nice nest egg. But I would definitely prioritise learning about funds and doing that rather than an account with interest. Interest rates are so very low that you get much much better returns with the stock market (although you need to tolerate the volatility). I knew NOTHING about this stuff when I had my first child. I slowly educated myself over 5 years and it is hands down one of the most empowering things I have ever done. I was afraid, but I took it slow and it has literally transformed our life. They don't really teach this in schools, and what 16 year old would listen anyway. But you are being a grown up. You are going to learn it and it will be brilliant. It makes SUCH a difference. And some people never learn it. You've so got this.
The FIRE starter thread on here has loads of links and podcast suggestions. Even if you don't want to FIRE (be Financially Independent and Retire Early) the resources are great for learning the basics of investing. A lot of people on there use Vantage which has low fees.
I put in £65 pm to a JISA for my kids over 5 years, plus £1000 at the start. I actually capped what I was putting in then as I don't want them to have too much at 18. So £50 pm is plenty.
I am shifting to putting in £42 pm into a pension. With the top up @ 20% (free money) this is about £50 pm invested. It will be enough to keep them out of poverty in retirement even if they do disastrously in other ways.
Best wishes for your journey.
Such a useful thread thank you op!
Wow @Starface thank you, that's so encouraging. I will read the FIRE thread - not something I genuinely ever thought I'd be doing . I'm encouraged that someonexas savvy as you is saving on a similar scale to me too.
As an aside I heard some financial advice on a podcast once which I liked (because it's straightforward). The advice was to manage money on a 50/30/20% basis:
50% on musts for day-day living (food, housing, essential clothes, utilities, travel to work/school etc)
30% on want-to-do's but not essential (holidays, meals out, trips, extra clothes and all that jazz)
20% into savings against major future things (house deposit, rainy day, retirement, etc)
I haven't achieved this but I like it as a rule of thumb and one day will set it up , after I've sorted out the kids!
@OneMoreForExtra no probs
Btw, I put Vantage above but I meant Vanguard, which lots of people on the FIRE thread like for its low fees.