Putting away £ each month for DD....

[poppymum11]

Hi there...I am really keen to start putting a monthly sum away for my DD for when she is 18 years old and would love some advice on whats the best way to do this...ie saving accounts/ISA...I have not a CLUE about either!! If anyone has any suggestions or advice it would be much appreciated :D xxx

Depends on your risk tolerance and how much you want to save.

The best basic option is a Junior ISAs that are now available, tax free (to a limit) and pretty easy to use. I would (and am) waiting on a savings account until they are old enough to do it themselves (currently debating it with 8 year old who has quite the piggy bank stash) but could be useful if you want to do over the ISA limit.

There are also Index funds (a stock fund which required minimal input and cost as it's self ticking and keeps a broad range of stocks to keep from getting too badly hit by swings and roundabouts). Stocks do tend to do better over the long term, but there is always a risk of capital not being there when you/she wants it. Good as a starter investment.

Those 3 are likely your best options to start researching from to make your choice (or spread among them).

we feel uni is paid for after graduation, and learning to drive is something DS can pay for with a weekend job...

but as parents, we believe it's unfair to expect him to have to rent when he leaves home. It put my shockingly handsome and fantasticly intelligent DH and me on the back foot financially. We were in the spiral of not being able to save for a deposit because we were spending so much on rent. Now our mortgage is less than our rent.

anyway, we worked out that to save 10% deposit of a £120k house, we'd need to put away £50 a month - which is quite manageable to us.

120k house - where?! Also a house that is 120k now will be much much more in 18 years

I would recommend a Junior ISA, DD has one, but you have to remember that once the money goes in it CANNOT be withdrawn until the child is 18. A lot of banks offer cash ones (although rates are pretty awful at the mo) or if you are OK with an investment you can go for a stocks and shares Junior ISA. Personally, I feel that the timescales involved (18yrs) mean that an investment product makes sense, so that's what I have gone for for DD. I will probably move it to cash when she gets closer to 18 though.
There is another thread on here about this as well.

Remember that if you put money away in a Junior Isa for DC - the money will be theirs to spend on whatever they like at 18. You have no say over it. Which will be fine if your DC is a level headed sensible young adult. But they could very well be "going through a phase" and decide to blow it all on two weeks in Ibiza/car/clothes etc.

So I would either put money aside in your own name (are you using your own isa allowance?) or if you do open a Junior Isa for them, don't mention it to them

If it's in your name, you also have control in case of a genuine emergency and you need the money to keep you all afloat.

I wonder whether it is possible to pay into a pension plan for a child? If it can be done, I reckon it would be a really worthwhile thing to do.

Yes you may make pensions for children, though of course you have no guarantees the pension provider will still be trading in 50/60 years time!

Thanks, joymachine

I like the idea of an ISA for them without telling them.

I found out that you an invest in a pension for a child with no ongoing financial commitment, just put in when you can, AND it is eligible for the same tax breaks as a normal pension. Incredible. Am going to think about this more.

Have reduced the amount going into the CTF to the bare minimum as I am scared they will be silly with the money at 18. .

our savings for DD are split 30/70 between a small ISA and a savings account as we can withdraw money if its ever needed. the savings account gets 3% interest just now obviously with no tax paid on the interest. we were wary of lots of money in an ISA as well then not having any control over the money when DD turned 18 - some kids are level headed but others go a little off he rails.

I feel pensions are too long a investment to invest into - you have no idea what the pensions market is going to be like in 50/60 yrs time - money tied up for 60 yrs doesn't sound like a good use of it.

I'm debating this at the moment too. DD1 (5) has a child trust fund, and we put a regular monthly amount into that and the same into a savings account. Am intending to move the savings as the rate is shocking and open an investment ISA and a savings account for DD2 (6 months). I think, having read the thread, we might change the emphasis though and put more in the savings. Grandparents tend to put birthday money etc. in the CTF as it's just for DD1, we can't get at it, but I'd like to have some control of the rest I think.

Before you think about investing for your child, how financially secure are you? Do you own a house, are you saving for you and are you going to be secure in retirement?

Pay your own debts and bills first, fill your own isa allowances before thinking of saving for DC at uni or house. Things will be different then.We chose to be mortgage free and pay for private school for our kids rather than save the money for their future lump sum gifting. We believe that the education will give them possibilities and our loan free home a permanent home for them to sell and spend the profits.

Putting money in an ISA for your kids is a sensible ideas. Americans have done something similar for years (they call it a college fund). University fees are now £9k a year and unlikely to come down.

We also put money into a SIPP for the kids but if you have to choose between an ISA and a SIPP, I would choose the ISA.

Some very good points here

I have just become a grandparent for the first time and am planning on setting up a Junior investment ISA with index fund(s)

If you want to keep the money out of reach until 18, I would recommend this

And you can rely on cash being a poor investment which is unlikely to increase in real terms

Pension is a very long way off imho

If you want them to possibly have the money before 18, don't use a junior ISA