investing legacy for 12 y.o.ds

[scaryteacher]

My Gran died 18 months ago, and left DS a small legacy (1K), which is sitting in my savings account. I'd like to invest it for him, and top it up by a £100 per month into an investment trust.

I have been looking at the internet trying to figure out which companies I should use, and am going boss eyed trying to decide. I am not good at figuring out which ones are best, and can't use an IFA as I do not live in the UK, but am a UK citizen with a house there.

I have narrowed it down I think to: F and C; Invesco Perpetual (used to be the Rupert fund) ; Fidelity Wealthbuilder or Jump (Witan Investments).

If there are any financial mavens out there, help! I want the money to help fund either a house deposit or pay off any student debt post Uni,(we intend to cover his fees) and I don't want him to have the cash at 18, but maybe at 21.

Thanks.

F&C have lots of different funds, so you'd need to watch which one you picked.

The Rupert fund used to have relatively poor performance -- my inclination is to steer clear of funds with fancy kids' branding.

Assuming this is your child's main savings pot, you want to go for something pretty mainstream and safe (or as safe as it gets in equities) with low charges. Also depends a little bit how old your ds is -- you'd make different choices for a 4yo than for a 14 yo, as the time frame is different.

Unless you set it up as a proper trust (expensive and complicated) or invest it in your own name (also not a good idea for tax reasons) there's no way round him being legally entitled to it at 18, though of course you don't have to tell him it exists.

FWIW, we make regular contributions into Fidelity Wealthbuilder earmarked for the children. It's a pretty good low-charge, no-frills UK tracker. They also have some lump sums in M&G UK tracker (same kind of deal). I have some of our own ISA savings in Witan, which is a mainstream international general investment trust. It hasn't done particularly well recently, and there've been some management changes, but it's a long-term safeish home for your cash.

Oh, and I think the Fidelity and the Invesco funds are unit trusts or OEICs rather than investment trusts as such, but for your purposes that probably shouldn't matter. Watch the charges, though.

Thanks for that...he's 12, and I'm looking to invest for the next 10 years for him. He also has an F&C investment that my PILs invest in, which seems to be doing OK at the moment.

I was wondering about splitting the lump sum and the monthly investment between two of the companies, rather than putting all the eggs in one basket. My mum thinks I should buy premium bonds as that's safer, but there won't be much growth there. I'd rather invest now when the market is going down as there is more potential (hopefully) for growth over the longer term. As he's an only he'll be OK when we pop our clogs anyway, as he'll get the lot.

tracker fund ..

make sure you sign the non-tax payer form

I think Virgin and L&G both offer decent trackers (do all share or top 250 not top 100)

Yes, I saw afterwards that he was 12, sorry about that! Which is a long-ish but not hugely long time-frame -- in fact on my to-do list is to make a call to my IFA asking him when we should start to move money for dd1 (13) out of equities, since I'm assuming she'll need it for university. So over that time frame you don't want anything too risky, but certainly in your position I would be looking for a little more than cash or premium bonds.

It also depends a little bit how much extra financial cushioning there is in your system -- if you can afford to pay his fees, then you're presumably not on the breadline, and won't be relying on the money to pay his rent at university. In which case you could split it and take a little more risk with part of the money, or have one fund for the lump sum and one for the regular contributions, which is what we do.

No, not on the bread line - more on the chocolate cake line thankfully! I should have invested for him earlier, but all the cash went into paying the school fees, which I felt was more important than saving up for his future! I'd like him to start adult life with a clean slate and no shed loads of student debt hanging around his neck, hence the query on what to invest in.