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Saving for our son

28 replies

LGBirmingham · 09/08/2022 14:24

Hi all,

I'd like to put aside some money for our son when he is older, ideally for a house deposit. He is currently 20 months old.

I've seen Junior Isas but I'm not sure if they're worth it? I'm also reticent about him being able to access it all at 18 in case he made a stupid decision. My husband thinks we shouldn't have one of these for this reason and should just keep money in our names.

I reckon we could save £100-200 a month for him. I think it would be better if he got access to any money more around age 25. When he may actually be thinking to buy a house.

We're not necessarily adverse to the stock market, but wouldn't want all the money going there I don't think.

What have others done?

Thanks

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Snowraingain · 09/08/2022 14:28

I would make sure I kept it in my name and I wouldn’t tell him about it. You have no idea what he will be like at 25 so don’t just assume he will do what you want him to do with the money. Chances are he will use it as you hope but you can’t assume that. Also the opportunity might come up in a few years for you to buy a flat or something and keep it for him.

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Schooldil3ma · 09/08/2022 14:31

I'm saving in my LISA for mine. 25% government bonus and when I'm 60 they'll be mid twenties so hopefully responsible. Obviously there will be tax implications as its technically my money so I've also started JISA'S for them and will hope they don't waste the money when they turn 18. I've also got some money in premium bonds for them, which I may strategically forget to tell them about if I don't think they are mature enough.
I'm basically spreading my bets.

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confusedlots · 09/08/2022 14:34

We currently save £200 a month for both our children. We put £150 into premium bonds and £50 into a junior S&S ISA. I didn't want them to have access to it all automatically when they were older and I also wanted to be able to access the money myself if we really had to (only in a real emergency) which is why we chose premium bonds. They do quite often win £25.

They will have access to the ISA when they're older which is why we currently put a smaller amount into it.

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FatAgainItsLettuceTime · 09/08/2022 14:39

I put £25 a month into a JISA which will automatically become DDs when she is 18 (slightly scary cos who knows how responsible she'll be) and I am trying to teach her financial responsibility in advance.

I put £150 a month into a S&S ISA in my name which I intend to use for DD either a house deposit or uni as needed. Also a bit scary with the economy as it is but it's a long term investment so I'm hopeful that the lowered price of S&S which are currently showing me no return will pick up and improve over the next 10 yrs.

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LGBirmingham · 09/08/2022 20:16

Hi all, thanks for the replies. You've confirmed that it isn't a good idea to put all the savings in a junior isa @Snowraingain,it's true that you just don't know how responsible they will be.

It hadn't occurred to me to use a Lifetime isa @Schooldil3ma which bank do you have that with? We use Coop bank and Cov Building society, but don't think either offer em. Ds will be in his late 20s when I turn 60 too so that could be a really good plan.

@confusedlots I've never been sure what premium bonds actually are. Is it a government thing? Where do you get them?

@FatAgainItsLettuceTime I've been thinking it's time to have a stocks and shares isa again. I had one during the financial crisis with Coop which got sold to Royal London and did really well with it. I feel at sea with it now because Coop don't offer them any more and I would want to know it was ethical investments.

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Schooldil3ma · 09/08/2022 20:19

@LGBirmingham My LISA is with nutmeg, they are an online platform. You can change your tolerance to risk, ethics etc if that's important to you.
I could come unstuck if I ever had to claim benefits I guess, but I'm hoping to continue to be employed so I'd cross that bridge if I came to it.

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coodawoodashooda · 09/08/2022 20:20

Snowraingain · 09/08/2022 14:28

I would make sure I kept it in my name and I wouldn’t tell him about it. You have no idea what he will be like at 25 so don’t just assume he will do what you want him to do with the money. Chances are he will use it as you hope but you can’t assume that. Also the opportunity might come up in a few years for you to buy a flat or something and keep it for him.

This.

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GroggyLegs · 09/08/2022 20:26

I save £100 a month for each of my children. They're in 12 month regular savers that dump is not kids savings accounts.
The interest is dire, but still better than most adult accounts.

I'm reluctant to tie cash up in 3/5 year fixed rate accounts right now as it's likely the interest rate will change in the coming months but it's frustrating watching it sit there not doing very much.

I'm also strongly opposed to letting my kids loose with thousands aged 18 so a JISA is not for me!

I'm considering premium bonds for a chunk.

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Cheesesteak · 09/08/2022 20:42

I save for her until she has enough to buy a decent gold bar, normally about 1oz, from the royal mintI, then put it in a safe. They can vault it for you though.

Gold in my opinion is the safest investment and you have full control over when your DC is ready to spend it wisely.

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CoffeeBeansGalore · 09/08/2022 20:44

Premium bond info:

www.nsandi.com

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MassiveSalad22 · 09/08/2022 20:45

Our kids have premium bonds and junior Vanguard ISA (stocks and shares) account.

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Angelicapickles1 · 09/08/2022 20:46

I reckon my point of view is different from most. I had access to a very large sum at 18 and it never occurred to me to splurge it all. Yes I went on a cheap package holiday but I saved it all to buy a house and was then mortgage free by 30. We are saving for both our children in stocks and shares in their own names. My parents taught me the value of money management and I already do with my own children as they will inherit from my parents probably by their early twenties a large sum anyway.

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LGBirmingham · 09/08/2022 21:01

Schooldil3ma · 09/08/2022 20:19

@LGBirmingham My LISA is with nutmeg, they are an online platform. You can change your tolerance to risk, ethics etc if that's important to you.
I could come unstuck if I ever had to claim benefits I guess, but I'm hoping to continue to be employed so I'd cross that bridge if I came to it.

What would happen if you had to claim benefits?

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CatSeany · 09/08/2022 21:03

There may be better ways but we have child saver accounts with santander that are under our name and we can transfer money between our accounts via the app. My plan is to put as much money as we can afford to save in my children's accounts. Transfer some back to our own account later on before they get control of the money to keep for uni/wedding/house and let them have the rest. I want them to have some to spend on what they would like, but I'd also like to keep a large sum back to give them for important things.

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Soontobe60 · 09/08/2022 21:11

I just started a stocks and shares Isa when my DD was born, saving a small monthly amount but adding to it whenever we could afford it. We used it when she went to Uni to pay for her accommodation, then gave her the balance towards a deposit for her first house. She always knew about it.

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Schooldil3ma · 09/08/2022 21:11

@LGBirmingham if you need to claim benefits I think you're only allowed only allowed a certain amount of savings, and you can't withdraw the LIA without penalty.

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MissyCooperismyShero · 09/08/2022 21:21

Snowraingain · 09/08/2022 14:28

I would make sure I kept it in my name and I wouldn’t tell him about it. You have no idea what he will be like at 25 so don’t just assume he will do what you want him to do with the money. Chances are he will use it as you hope but you can’t assume that. Also the opportunity might come up in a few years for you to buy a flat or something and keep it for him.

This
We have been saving £250 per month for our son for the last 20 years. He is now 27 and has no idea. God knows where he thought the money that allowed us to put towards his flat deposit or buy him a car came from. We will continue to to put that aside for him for as long as we are able. I can see plenty more opportunities to help with weddings, childcare etc over the years.

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lot123 · 09/08/2022 21:22

I'd recommend a stocks and shares Junior ISA (I have the joy of covering this in a work capacity). With inflation tipped to exceed 10%, money in cash ISAs paying 3% or whatever a year is losing a fair chunk of money in real terms every year.

Pick your JISA provider carefully as fees vary significantly and can eat into the value of your portfolio more than you think. I'd have a look at AJ Bell, interactive investor and Hargreaves Lansdown, They're decent all rounders and offer a lot of tips and guidance.

I'd look at some of the investment suggestions and spread it across funds in different sectors and geographies. Normally I'm not a big fan of monthly investing but there's so much economic uncertainty at the moment, and the FTSE 100 has held up surprisingly well in 2022, that I'd probably drip feed it in.

I wouldn't worry too much about access at 18. While this is true in principle, there's always the practical requirement for them to have the log in codes etc. although they could find a way. Junior ISAs convert into adult ISAs on their 18th birthday.

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coodawoodashooda · 09/08/2022 22:25

MissyCooperismyShero · 09/08/2022 21:21

This
We have been saving £250 per month for our son for the last 20 years. He is now 27 and has no idea. God knows where he thought the money that allowed us to put towards his flat deposit or buy him a car came from. We will continue to to put that aside for him for as long as we are able. I can see plenty more opportunities to help with weddings, childcare etc over the years.

Well done!

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LGBirmingham · 25/08/2022 09:10

Hi all, me again. Thanks for all the great advice you sent through.

I have opened a junior ISA for ds. He actually came with me to the building society to open it (god knows that I was thinking he kept trying to take the paper out of the printer and run out of the door!). He had a bit of cash people gave him when he was born so I put that in and I think I will set up a standing order for a small amount of money maybe 10 or 20 quid to go in regularly. This can be money he can be in control of when he is 18, for uni or to kick start him in a career, but won't be a huge sum so I won't be worried about him making irresponsible decisions at that age.

Then I think dh and I will save a larger sum for him amongst our own savings. I'm thinking it is a good idea for both of us to open a stocks and shares ISA, ideally different ones so we spread the risk. Where do you all have your stocks and shares? I have come across a company called Nutmeg that seems to be ethically minded, which is very important to me. Does anybody have experience with them?
www.nutmeg.com/socially-responsible-investing?awc=15889_1661414330_d0378bf6750e3259337f408e656c0d9a

Thank you.

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carefullycourageous · 25/08/2022 09:24

Snowraingain · 09/08/2022 14:28

I would make sure I kept it in my name and I wouldn’t tell him about it. You have no idea what he will be like at 25 so don’t just assume he will do what you want him to do with the money. Chances are he will use it as you hope but you can’t assume that. Also the opportunity might come up in a few years for you to buy a flat or something and keep it for him.

This is my view too.

You also do not know if there could be a big issue in e.g. ten years' time and it might be best to be able to use the money as family money rather than have it untouchable. Obviously personal circs affect this decision but many people do not have enough to risk locking money away in an unuseable place.

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hop321 · 25/08/2022 09:26

I know Nutmeg, it's a robo-adviser. News to me on the ethical side but it may be.

There's a difference between the trading platform itself and the underlying investment products. All of the big ISA platforms (Hargreaves Lansdown, AJ Bell and interactive investor) have ESG funds if that's what you're after.

I believe Nutmeg only offers managed portfolios rather than free choice, and ETFs rather than actively managed funds as well. ETFs are a low cost way of tracking the market but, given the current volatility, there's not really anywhere to hide whereas an active fund manager has some (although limited) scope to try to protect against losses

Personally I wouldn't want to pay up the annual fee of up to 0.75% and would rather have a wider range of investment products to choose from.

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LGBirmingham · 25/08/2022 09:41

hop321 · 25/08/2022 09:26

I know Nutmeg, it's a robo-adviser. News to me on the ethical side but it may be.

There's a difference between the trading platform itself and the underlying investment products. All of the big ISA platforms (Hargreaves Lansdown, AJ Bell and interactive investor) have ESG funds if that's what you're after.

I believe Nutmeg only offers managed portfolios rather than free choice, and ETFs rather than actively managed funds as well. ETFs are a low cost way of tracking the market but, given the current volatility, there's not really anywhere to hide whereas an active fund manager has some (although limited) scope to try to protect against losses

Personally I wouldn't want to pay up the annual fee of up to 0.75% and would rather have a wider range of investment products to choose from.

What are ESGs and ETFs. I'm feeling pretty financially illiterate at the moment 😂

I'm assuming a robo-adviser means that some kind of algorithm decides when/where to invest our money? And a managed portfolio means you don't choose exactly where to invest your money? To be honest that sounds better to me as I don't think I have the confidence to invest it myself. Although I wouldn't want it being invested in armaments or other questionable things.

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hop321 · 25/08/2022 11:34

Sorry, it's my job so I forget how annoying acronyms are.

ESG = environmental, social and governance. In other words, perhaps less about investing in ethical companies, more about avoiding investing in unethical ones (e.g. weapons, tobacco). It's worth pointing out that there's a fair amount of scepticism about ESG investing and whether the reality doesn't entirely meet the brief.

ETF = exchange-traded fund. These are lower cost (than traditional 'actively managed' funds) and aim to track an index or benchmark. It could be the FTSE 100, the price of gold or a wide variety of things. The challenge with ETFs is that you will simply receive the return of the index - good if it's going up, not so good if it's going down.

I'll answer the others in a separate post

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hop321 · 25/08/2022 11:41

All of the major platforms offer model type portfolios, some just for the initial investment, some rebalance them on an ongoing basis. They also have a list of their recommended funds so you can pick from those if you prefer.

Personally I'd pick my platform on the range of investments (so a full list of funds, ETFs, shares and investment trusts) and the fees. The fees may seem marginal but it can make a big difference over time. The fees are typically:

  • Trading fee - often free for funds, usually a flat charge (£5-10) for shares, ETFs and investment trusts
  • Platform fee - typically 0.25-0.5% of the value of your portfolio, charged on an annual basis. Some (interactive investor) charge a fixed fee instead. Some charge the platform fee only on funds, some on the other types (but often capped)
  • Investment product fee - often called "total expense ratio". This is often around 0.1-0.2% per year for passive funds/ETFs and 0.3-1.0% for actively managed funds


I'm not sure whether Nutmeg charges an annual management fee on top of this, or whether it incorporates their platform fee (I suspect it does).
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