Saving for child

[ag7962]

Just wondering how to save for our child's future, hopefully for a deposit.
Currently I have a savings account in my name that around £120pm goes into.
Then there is a JISA in his name that only gets around £20 into it was thinking that this could amount to driving lessons/car or whatever is needed.

Baby is only 4 months old at the moment, can potentially increase what we are paying in once I'm off maternity leave.

We are middle earners at the moment wanting to help as much as possible for when they are old enough but balance that with actually doing things with them over the next 18 years!

Is there a better wait to save? What kind of deposit for those with the gift of foresight will be needed in 2050ish? 🤷‍♂️

There are some high(ish) regular saving accounts at the moment you can save a monthly amount into.
JISAs are in the child's name and they have access from age 18. From threads on here, it may or not be best to save in your child's name...

We have a Junior ISA and SIPP through Hargreaves Lansdown for DS.

Be careful of saving too large a sum in an JISA - not all eighteen year olds will use it for something sensible that you approve of. We also have separate funds under my name for his university and mortgage deposit - these are specifically not in his name so that if he turns out to be useless with money at 18 he cannot get his hands on it and blow it. If he doesn’t go to University then the money can be used for something else.

Thank you, that's why we have split the savings for now so that a small percentage can be accessed at 18 and a larger amount is still in my name but will be strictly kept aside for when he's already saved something independently towards a house hopefully having learnt some financial responsibility with the other account.

With the SIPP is that in their name or yours? Im not sure I understand these that well.

Firstly what to invest your money in:

Putting money in a savings account will earn interest, but this probably won't keep up with inflation over 20 years.

For long term savings, investing in passive stock market index tracker funds has historically exceeded inflation. However they can go up and down on a daily basis, so you do need to research beforehand so you don't panic if they drop one day. Look at funds like Vanguard VWRP, Global All Cap. HSBC global index tracker fund.

Secondly where to put your money:

Options are basically in your name or in their name (which usually becomes theirs once they are 18). I would prefer to save in your name if possible, and gift the money to them at an appropriate time e.g. when they are buying a house.

If you don't use your annual ISA allowance you could put the money in a stocks and shares ISA in your name and mentally mark it as your child's future deposit.

If you do use your annual ISA limit for yourself you would need to decide whether to invest outside the ISA wrapped in a general investment account and pay some tax on the gains, or put it in your child's ISA and hope they are a responsible 18 year old. I would use a GIA!

Op I would also open a sipp. Self invested personal pension.
You don't have to add much to it at all yourself, get it open and put little bits in. It's fhe power of compounding by the time he's retirement age and would have added to it himself it could be a very nice sum for little effort.

We have cash isa for dc for car /driving lessons and it ain't suddenly go down like investment can. We also have stock and share isa for uni.

They have a few 100 in card access account for their spending either friends, pocket money etc.

Sipp is a pension so definitely in his name and he can access it until retirement age.

Sounds silly but my goodness I wish someone had done this for me.

@ag7962

Absolutely re learning financial responsibility.
It it something that needs teaching hence why my dc both have cards now one is 10 to manage their money see it go... See it rise we show them our spreadsheet each month, we talk money all the time.

They see us save for everything and how we don't use our cc for anything we couidnt already pay off.

It has to be in the child’s name.

As pp said, if you are prepared to take some more risk than what a High St bank offers then a Stocks & Shares ISA will give a much better return. We do all our savings, SIPP’s etc through Hargreaves Lansdown who also have financial advisors to help if you need them.

A SIPP is a self invested personal pension. So saving into your child's pension. They wouldn't be able to access it until near retirement age, so they couldn't use it for a deposit in their 20s/30s.