What's the best trust fund for a newborn?

[salsaprincess]

Hi everyone,

My baby is 8 weeks old and I would like to open a savings account/trust fund (don't really understand the difference if I'm honest lol) for her. I don't want to commit to putting in a regular amount each month but I am happy to leave the money there for 5 or even 10 years. Any recommendations please?

Thanks xx

I have exactly the same question! Savings rates are rubbish at the moment and about 3% is the best I've found - just using moneysupermarket etc. Sorry I can't help but will be interested to see if you get any recommendations or alternative suggestions.

You can start a Child Trust Fund. These are managed unit trusts i.e.invested in the stock market, are tax-free, have an annual cap on contributions, mature when the child is 18, and over that length of time are likely to outperform any savings account. On the horizon are Child ISAs... but I haven't seen what they involve yet. Savings accounts are low risk.. make sure you tell them that it's for a child so they don't get tax deducted from any interest... but the interest they earn is very poor. Another option is to start a private pension - but obviously, they don't see that until they retire!!

My DS has a Child Trust Fund with 'Family Investments' that I contribute to each month and which I've designated his college fund... for ad hoc gifts from relatives etc. and to give him the idea of how money works he has an ordinary savings account with Nationwide. Spreading the risk.

We have opened a regular savings account in his name with Halifax, and a stocks and shares ISA in my husbands name for the baby with an investment company (Investco Perpetual or similar name). With a newborn we won't be using this year's ISA allowance anyway!

If you are happy to lock money away for 5-10 years I would invest in a stock market tracker type product. We looked at a few and the fees were lower on a stocks and shares ISA. We looked at a child fund thing with a mutual company - maybe Family Investments, but the fees were very high.

We asked a financial adviser for advice though - best if you are thinking about a significant amount of money.

I think you need to get independant financial advice. Your attitude to risk may not marry up with the posters here even though they are genuinely trying to be helpful. Also your personal circumstances can then be taken fully into account.

Thanks all! Lots to consider

Are you thinking of a regular amount put aside each month or something more ad-hoc? And what sort of amounts are you thinking?