Saving for our son

[LGBirmingham]

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

@hop321 How wonderful to have a reply from someone who works in this field. It's all very confusing.

I definitely am concerned about my money not going unethical causes like you mention. I think I may have had an ESG before, back when I had a Stocks and Shares ISA with Coop during the financial crisis. I remember thinking it's great that it's ethical, and then seeing they invested in Tesco and thinking it was borderline whether that was ethical or not at the time.

So if it is and ETF that tracks the FTSE 100 does that mean that it invests a proportion of your money in all the FTSE 100 companies?

@hop321 with a platform fee being charged on the value of your portfolio does that essentially mean you will be charged yearly regardless on whether your portfolio has gone up or down? And the same with the investment product fee?

With a platform fee being charged on the value of your portfolio does that essentially mean you will be charged yearly regardless on whether your portfolio has gone up or down? And the same with the investment product fee?

Yes to both. You'd pay a lower platform fee if it was percentage based and the overall value of your portfolio has gone down. But that's not really a net positive!

So if it is and ETF that tracks the FTSE 100 does that mean that it invests a proportion of your money in all the FTSE 100 companies?

In essence, yes. The type of replication varies but the ETF buys a basket of FTSE 100 shares in proportion to their market capitalisation (or value).

A couple of other things worth considering:

• Do you want an income or mainly growth? For example, some of the FTSE 100 companies are currently trading on a dividend yield of 11-12% - so, at their current share price, you'd receive an annual return of 11% (based on last year's dividend).
• You can also buy income focused funds/units and choose to reinvest the income rather than have it paid out in cash. These are known as income or accumulation units.
• US stock markets have fallen significantly in 2022 whereas the FTSE 100 has held up reasonably well as it has a higher proportion of blue chip 'plodders'. This may not last though...
• Stock markets are very volatile at the moment. You could drip feed in your contributions monthly to spread your 'in cost'. Or hang off and see what the economy does between now and when the ISA tax year ends next April.

Overall, it's a difficult time to invest at the moment giving the inflation rate, rising interest rates and signs of a recession. While it can be great to buy on the dip, it's hard to judge when the bottom of the dip is!