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Dc given £3000 each, where to put it?

18 replies

Posey · 31/10/2007 19:43

My parents have had a 10 year saving plan mature and with the proceeds have given each of their grandchildren £3000.
If you were in our position, where would you put it?

OP posts:
Kitsandbits · 31/10/2007 19:46

My bank account

Want the details ?

MrsTittleMouse · 31/10/2007 20:02 says that there is a children's savings account with Halifax that pays 10% interest. That's really good, although the downside is that it's a regular saver account, so you have to pay in a fixed amount monthly.
There's nothing stopping you getting a regular account (like or Sainsburys) and getting an R85 form to stop the tax being taken off though.

Posey · 31/10/2007 20:33


Thanks MrsTM

OP posts:
littlemissbossy · 31/10/2007 20:36

National savings childrens bonus bonds - or similar
and have you thought about premium bonds? any winnings are tax free

frogs · 31/10/2007 20:44

Posey -- depends whether you want the security of cash or the potential growth of equities.

For cash accounts, be slightly wary of chasing the current best rate unless you're prepared to keep monitoring rates and moving the money when it becomes uncompetitive. Nationwide have a reliably good kids account which isn't always the very top rate, but is one of the most consistently good iyswim.

But actually, that amount of money for a period of 5-10 years, I'd put it in shares, in a low-cost FTSE-All share tracker fund like M&G or Fidelity. Something with no initial fee and very low annual fee. Avoid the branded children's accounts. Obviously there is a risk with that, but over a long period it should significantly outperform cash. But depends on how great your cash reserves are, and how risk-averse your attitude.

In either case, make sure you set the account up as a bare trust, ie. the money is held on behalf of the child and register for interest or income to be tax-free.

crunchie · 31/10/2007 20:47

How old are the children??

I only ak as you wil get the BEST possible returns if you put the money into shares (you can do ISA's or whatever) rather than a savings account. ANY savings account will only give returns of a bit more than inflation which basically means the money will grow, but as inflation/prices go up in 10 years it will only be worth the same.

IMHO I would look at ISAs or whatever where you can buy shares (I have an old High Income Pep where I have seen £5000 grow to over £15000 in the last 12 years)

I do have the halifax account for my kids, but basically you have to save each month and at he end of the year the money if transferred to another account. I will gather together the money and then look at a good place to invest each year (I am assuming I will have about £500 - £100 per child each year to stash away) This means when they hit 18 they will have a real decent lump sum (DD1 is 8 and DD2 is 6)

foxinsocks · 31/10/2007 20:52

I guess it depends how long you want to invest it for (and what your strategy is).

Those National Savings children's bonus bonds (that littlemissbossy mentions) are good. They are completely tax free and are designed for long term investment, 5 years plus (the returns are good).

Other than that, ISAs are tax free (you'll need to open them in your name). There's lots out there!

You might want to talk to an IFA.

prufrock · 31/10/2007 21:01

You would have to do an ISA's in your name - under 16's can't hold them. And even if you haven't already done your own ISA's this year, I would still caution you against it because the money would be in your names for inheritance tax, or at the other extreme, bankruptcy etc.

Posey · 31/10/2007 22:19

Gosh, lots to think about there. Thank you.
I guess I want to put the money out of reach, to grow for their future. So for dd that would be about 8 years and ds 13 or 14 years.
Thanks for your ideas.

OP posts:
ChasingSquirrels · 31/10/2007 22:22

could ds's go into a CTF, or is he just too old?

BigGitDad · 31/10/2007 22:26

Whatever you do I would keep the money in your name just so you have control over the money. You have had some pretty good advice on here so far.

ChasingSquirrels · 31/10/2007 22:37

I feel exactly the same as BGD about money that I choose to invest for them, but not about money given to them by others. Hence I do not add to their CTF's, but am quite happy for grandparents to do so. Everyone makes their own choice on this.

frogs · 31/10/2007 22:53

BGD, most children's savings accounts (for under-7s anyway) and all children's share accounts are held in the adult's name as a bare trust -- this is where the account has your name on it with the child's initials after it, or 'in re posey's ds' or whatever. Legally it belongs to the child for tax and estate purposes, but you have control until the child is 18.

If you have only 8 years for your dd, I might be tempted to keep £1k in cash and put the other £2K in shares. But as I said before, it does depend on whether you have other cash reserves earmarked for them.

ninedragons · 01/11/2007 03:43

I am a big believer in teaching children about active investing. If it were me, I'd set aside a bit of it and help them to choose a stock portfolio.

They'll be streets ahead of almost all of their peers when they hit adulthood if they already understand what a P/E ratio or a dividend is. I love the idea of kids who are already in the habit of reading the business pages before they leave school.

It should also help them think about what makes a good company. I read about one family who gave their really quite young son (I think he was about six) a bit of money to put in the stock market and he picked all food companies whose products he thought were delicious, and did rather well.

BigGitDad · 01/11/2007 14:36

Frogs, my point is that children change over time and things happen in the parent/child relationships. In the main putting investments in a child name will probably be fine. However in my experience I have seen plenty of cases where children get to the age of 18, the money becomes theirs and they blow it up the wall. By keeping the investment in your name you control the situation and so can choose if you child is making a sensible choice with the money.

PutThatInYourPipeandSmokeIt · 05/11/2007 12:08

I agree totally with BigGitDad. With that said, I too am trying to work out where to put my DD's money! She will be given on average £500-600 a year. What's the best thing to do bearing in mind that I am a total beginner with the investment thing? We have a CTF for her but I want this extra money in a separate pot that she doesn't just get at 18 years just incase....control freak or not, I do believe that it's the best thing for her and if she turns out to be a financially wise individual, then we can talk.

MrsTittleMouse · 05/11/2007 14:33

Put that: I'm not a stocks and shares guru (quick disclaimer at the beginning!), but I would either put your childrens' money in a saving account with a great rate of interest (and register the interest free of tax). Or, if you wanted something that had higher potential growth you could put it into the stock market, but in a product that had a good spread of risk (perhaps a tracker - it follows the stock market exactly, it isn't like owning individual shares), and crucially has very low fees. The management charges for financial products tend to vary a lot and will really eat into the gains. After that, as long as it's a fairly big respectable company, I don't think it makes much difference.

MrsTittleMouse · 05/11/2007 14:35

PS I also wouldn't put money in shares unless it wasn't going to be touched for, ideally, 10 years. I'm just not a wizard enough to beat the odds in the short term, but over the long term stocks have always done well.

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