Investing for future child

[Rapunzel91]

Hi everyone,

I’m pregnant with my first and starting to think about how I can save/invest for my little one. Very early I know! But I’m a worrier and planner

I don’t have a great income so I’m only able to contribute £25 a year, but hopefully that should increase as I progress in my career. Will also mention that my partner earns a good salary and would be able to contribute more.

I’m thinking about Junior S&S ISAs, is that what people would recommend? I don’t want to put money in a savings account, I would prefer to invest it so it could possibly grow until the child is 18. I’m planning on being transparent with my child about the money that is being invested for them and I educate them about money as I feel it is such an important skill to have in life.

My question is, as I’m only able to contribute a low amount, is ISA the best way to go?

How much can your partner contribute? £25 a year is such a small amount that it wouldn’t even cover the admin fees of most platforms. Did you mean £25 per month?

I agree that, when the time horizon is so long, a stock and shares ISA is a more sensible option, but you really need much larger sums, otherwise you won’t even cover the costs. Why not open a cash junior ISA, put whatever you can there, and consider transferring the money to a junior stock and shares ISA (yes, you can transfer from cash to s&s ISAs) once the pot has grown a bit (at least a few thousand pounds)?

Also bear in mind that little Johnny or little Mary will have full access to the money (I believe they can manage it at 16 and withdraw it at 18) and you won’t have a say. We all hope our children will grow up to be the most responsible and sensible young adults, but we cannot know for sure!

More in detail:
Interactive investors, which is a large platform with competitive pricing, charges £90 a year of admin fees, which can be used as trading credits (the first £22.50 worth of trading each quarter is included). “Trading” means buying and selling securities. The advantage is that this fees covers all your accounts: personal trading account, SIPP, ISA, junior ISA in the name of your child. If you have tens of thousands of pounds across multiple accounts it’s good value. If you’re investing minimal amounts in a junior ISA, no.

With AJ Bell you invest www.youinvest.co.uk/investing-for-children/charges-and-rates the charges may work out lower for small amounts, but you’d still need to invest way more than £25 per year for it to be worth it

With Fidelity you’d pay £2ish a month for holding less than £7,500 www.fidelity.co.uk/junior-isa

I use interactive investor for our child; however, her junior isa is associated to my other accounts, so the additional fixed cost is zero because I’d pay the same £90/year fee regardless of whether I have a junior isa or not.