Investing for my children and myself - No clue where to start or what to do once I start

[NautilusLionfish]

Namechanged as am embarrassed at how stupid I've been with money...

I come from a culture where you buy a house, start a business and that's your investment. I have no investments or tax protected savings. But I tend to have cash stupidly sitting in regular savings/current account for years (only been in UK 3 years but previously left 30000€ in a simple savings account for over 10 years. My biggest regret).

I now want to save for my children (1 year, 3.5 years). Am 44 so at the twilight end of my earning life. I can immediately put away 20 to 30 thousand £ and have another 30 thousand to live on and hope for more work (am self employed).I have no clue about savings but just started a bit of research on forums. From hearing what people do, am thinking to put £9000 away in JISA for each of the sprogs (can I put in more?) then decide what best to do for myself with the other 10000 to 20000.

I could use that to start an ISA for me (can I have 3? two for two kids and one for me?).
Rather than investing a bit for myself, should I opt for buying a life insurance that will help my kids when I die. Am really worried what will happen to my kids should I suddenly die. My second worry is what will happen to me when I can longer work (old age or sudden disability). Please advise.

Also, who are the best companies to go with for ISAs and for life insurance. Vanguard is often mentioned. And once I subscribe how do I choose the split between different stocks/shares/markets? I hate it that am so clueless. I should also add, my kids' gran has something set aside for them. She says 10,000 each, likely in ISAs.
If you've read this far, thank you

I in ISA stands for Individual. So no you cannot have 3 ISA's for you.

Every tax year (6th April-5th April) you and your children get an ISA allowance. Use it, or lose it.

Your allowance for 2021/22 tax year is £20,000
Each child has an allowance of £9000 (using a Junior ISA).

If you have people dependent on you, then you should have life insurance.

It is also a good idea to have Income Protection insurance so if you have a severe illness you are likely to be paid a percentage of your usual income.

I arranged my IP insurance via Cura Special Risks Bureau, as I have a mixture of employment and self employment so having a broker who took time to understand how my income worked was important.

Find yourself an independent financial advisor to talk things through.

My own thoughts are that you should definitely look to open an ISA for yourself in order to maximise your savings. I have a stocks and shares ISA set up by my IFA and it has returned 18% net growth this year which you will never achieve with a bog standard cash ISA. Of course there are risks associated with that so a good IFA will assess your tolerance for risk and advise investing accordingly.

Look at child savings accounts for your children. We have ours with Halifax which is one of the highest paying available on the high street right now. You can pay in a max of £100 per month to the account with the higher interest rate but it comes with an attached account, paying a lower rate but still better than standard adult savings, that has no max limit.

Pension - SIPP
This is a tax wrapper used for investments that are to be used for when you retire. You get tax relief on payments you pay in, which means more money is going in, which then has time to grow. 25% tax free on withdrawal and 75% taxable at your tax rate at the time of withdrawal, which if you are not working can mean that you can take £12k plus out tax free each year. It is age restricted, so you cannot access until age 57 at earliest. I am keeping this as simple as possible... the rules around pension wrappers are more complex but this is the basic principle.

Having a combination of Pension and ISA is what most people need.

A good starting point is The Meaningful Money Handbook, which is available in paperback, on Kindle, and on Audible. It is a easy to read guide to budgeting, insurance, and investing by using pension and ISA. It is written by a UK financial planner, so is specifically designed for people living in the UK.

Age 44 is not the 'twilight end' of a working life. You've still got at least 23 years to go. So chin up!

You don't need an IFA to setup an ISA or a Pension/SIPP. These are easily setup yourself, such as using Vanguard Investor as you have already mentioned, with a multi-asset fund (Vanguard has Target Date funds and Lifestrategy funds, which are multi-asset).

I agree with all of the above. I don't think you necessarily need a financial advisor.
Home insurance, critical illness insurance.
ISAs for the kids and for you.
Personal pension (SIPP) if you haven't got any pension.
Meaningful money handbook and/ or podcast will tell you everything you need to know.
Good luck, this is all really exciting stuff! :-)

My children have Jisas with ii.co.uk. The main reason for this is that I have my ISA with them, and if so they are free. The money inside the JISA is invested in low cost ETFs and index tracking funds. I like vanguard but also have some iShares trackers. If you want exact tickers let me know but I am not a financial advisor.

@SvartePetter Does ii give you access to Blackrock MyMap funds? Those I hear are like Vanguard Lifestrategy but are lower cost.

I get that you want to save for the children's futures, but they're very young and if you're worried also about ill health or stopping earning within the next 20 years while they're still dependent on you it might be more sensible to keep the money in your own name to give you more flexibility over it. There's also no tax reasons to put it in children's names in the UK currently for the kind of money you're talking about - you can put £20k a year into an ISA in your own name, and even outside an ISA there's no tax on the first £1000 of interest you receive. It's possible to put money in some kind of children's accounts and still to be able to access it but I can't see the need to do that in your situation.

Fair enough for those that say an IFA is not needed, I just thought that as OP seems very unsure about what to do it would be worth having an IFA look over everything, talk through future aims, and advise next steps.
Not everyone has the confidence to go it alone and when it comes to finances it can be easy to make costly mistakes.

Am 44 so at the twilight end of my earning life
What?! You have about 26 years left to work and have probably only been working for 22 years at most. You’re not even halfway?

@Delphinna

Am 44 so at the twilight end of my earning life What?! You have about 26 years left to work and have probably only been working for 22 years at most. You’re not even halfway?

Aaw thanks. It's cultural. My parents, by law, had to retire at 50. While it's different now, I realise by these responses it unreasonably influences my thinking here

@nannynick

I in ISA stands for Individual. So no you cannot have 3 ISA's for you.

Every tax year (6th April-5th April) you and your children get an ISA allowance. Use it, or lose it.

Your allowance for 2021/22 tax year is £20,000
Each child has an allowance of £9000 (using a Junior ISA).

thanks. I meant paying into three: one for me and two for my two kids. Not 3 for me

@nannynick

If you have people dependent on you, then you should have life insurance.

It is also a good idea to have Income Protection insurance so if you have a severe illness you are likely to be paid a percentage of your usual income.

I arranged my IP insurance via Cura Special Risks Bureau, as I have a mixture of employment and self employment so having a broker who took time to understand how my income worked was important.

Thanks. Never heard or considered this. Writing this down and certainly do this. My sister had a stroke at 36 and it affected her earnings though she's only lost use of her arm and is otherwise perfectly healthy

Seconding meaningful money mentioned above. He had a great podcast, and is very systematic in his approach. He will talk your through all the steps in getting your financial house in order. I would first invest some time, then be guided by his process to develop your own plan. But set yourself a time goal, its too easy to put this stuff off and leave yourself languishing for years.

Before investing in anything, you need to work out a financial plan and build a financial pyramid.
Take time to think about your requirements and study how investments work. Never invest in something you don't understand just because someone recommends a financial product.

Financial pyramid - just a handy way to think about your plan and work through it in order of priority..

At the base layer is contigencies for if the worst happens...
Life insurance, so if you pass away, your children's carer has enough to funds to raise them.
Cash savings for emergencies - such as your car or boiler breaks down.
Mortgage protection insurance, and savings to cover your income if you can't work for 3 to 6 months; and/ or income protection insurance.

Next layer up - longer term contigencies.
Poviding an income in old age. Check you are paying National Insurance contributions for the state pension. Can you add extra years?
Set up a personal pension. A pension is just a savings and investment pot that the government add to. In return, they put restrictions on how and when you can access your investment.There are many ways to invest in a pension. Some are very low cost and easy to set up and manage. You don't need a financial advisor for this. Which one to invest in will depend on your attitude to risk.

Third layer - Longer term investments outside a pension - such as Stocks an Shares ISA's, to achieve some of your life goals - a dream holiday, major upgrades on your property. Also to provide financial security - paying off your mortgage (If you have one).

Fourth layer - a legacy for your children. Junior ISA's, childrens pensions, setting up long term investments for them.

Work through your own plan starting with the basics and move up systematically to the next levels.

@NautilusLionfish

As above some great advice.

Black Rock and vanguard do similar life stragety products where you put in your attitude to risk and it explains what that risk is eg why bonds off set equity.

I also think opening up sipp for the children now is a great idea just in case they do blow that initial saving amount. The sipp would have years to accumulate. I wish someone had started one for me .

Thanks everyone. I had a 30 minute free chat with an IFA and of course they don't tell you much (other than that I had done good research. Thanks mumsnet!) since they want business which is fair enough. I have also had chats on another forum and the advice is similar to here. So given the costs of an IFA I am thinking of going alone. Its daunting but I might go mid risk.
My thoughts are:
Get life insurance (I have to decide on level of payout depending on what I pay in but it seems relatively affordable)
Get income protection insurance
Get SIPP that kids can inherit (in lieu of JISA. This and the life insurance should be better than a JISA they get at 16/18?). Put 30k in this SIPP
Put 20k in ISA before the end of this years allowance before April 5th

I am looking to a good work year this year (if health allows), I can have 10k that I can add to these two for next year's allowance. So may be put 5 in each? Or should I put all that in SIPP and be adding bits to the ISA as and when the money comes in. Say £100 per month?
Any suggestions for affordable but good life insurance providers? I have been suggested Aviva, L&G, AIG, and Aegon. Any views?
Thanks again all for your help. I will continue learning from you and the suggested resources.

I hope UK now has good financial and investment education from primary school? My country doesn't have such opportunities (for investments and most people couldn't afford it anyway) but I wish I had had financial advice 16 years ago when I started having good jobs

@NautilusLionfish - well done on creating your financial plan!
For Life Insurance - suggest you use a price comparison website such as Money Supermarket, as they often have better deals. Study the terms and conditions to ensure the policy meets your requirements. Then choose the best quote with favourable T&C's of the big names you have listed or that you trust.
Think about whether you want premiums (and potential payout) to rise with inflation, or will you just choose a larger amount of payout and premiums at the outset, to offset the inflationary effect over the timescale.
Before making the final application, look on cashback sites such as Topcashback to see if your chosen provider has offers or cashback (this can be quite a tidy sum for a larger financial products, so worth a bit of research).

thank you

I think you have a good plan.

I would definitely agree to keep the money in your name given the age of your children and the sums involved.

And life insurance is a must. Level term (so it just covers you until your kids are eg 25) is much cheaper than full life cover if you need to save costs.

Good luck.