Investing £20,000 for a child

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How would it be best to do this?
It is inheritance he has received and I want to make sure I do what’s best for him with it in terms of investing.

He is 11 and I would expect him to have use of the money for uni/driving lessons/car/deposit on property.

I’ve spoken to a company about a discretionary trust but want to explore all options. He’s got a few thousand in a 5% savings account and this is the maximum he can pay into it.

I'm not a lawyer but I don't think you need a discretionary trust unless the Will requires it. A bare trust would be fine, or account is his name if there are no restrictions on when he can have the money. Are you thinking about stocks and shares or cash?

I was going to say this.

What you invest in will depend a lot on what the will says about when he can get the money.

Check for any stipulations in the will first off, you’ll need to comply with them in the first instance.

That aside you could look at a JISA or JSIPP bearing in mind they will get access to it when they turn 18 when you’ll have no control over what they do with it. Alternatively max out your own ISA allowance if you haven’t already…with cash or S&S (for the latter, the longer it’s invested the better growth it’s likely to have).

Putting money into a junior SIPP is unlikely to be appropriate - means he won’t be able to access that money until he’s well in his 50s under current rules.

JISA might be worth looking at depending on the terms of the will.

JISA in S&S, broad based index fund. £9k this tax year, £9k next. Available at 18. Keep £2k back in an accessible savings accounts so they can do driving lessons at 17.

There is no Will. The executor has paid it directly into my son’s current account. It’s inheritance from a pension death benefit if that makes a difference.

Agree max out S&S junior isa £9k now then another £9k in new tax year (April). Leave the other £2k in 1 year savings acc and put in ISA next year. I would put it in 100% equities index fund eg Vanguard FTSE Developed World ex UK accumulating. Lots of info on line - Rebel Finance excellent.

BTW I simply wouldn’t tell him you have this money and manage it yourself until you feel he’s ready to have it. Putting it in a fund like above it won’t need much taking care of anyway.

I would do junior SIPP as the money won’t be accessible until he’s at least 57.

If you’re happy with him having access to it at 18, the simplest and cheapest is to invest via a JISA in a global
tracker fund.

You can add £9k a year.

it’s his money. OP would be acting completely unethically to do what you have suggested about not telling him / putting it in something he can’t access until his 50s.

What is it about some posters (not OP) wanting to control their children in this way?

I think this is very sensible advice. A discretionary trust doesn’t really make sense in this scenario as it’s already his money. Invest the first 9k this tax year (ie by 5 April) and the other £9k after 6 April. And then leave it. Not a financial adviser but the fees relative to a £20k investment are probably disproportionate. Have a look at money saving expert for recommended platforms. I use Wealthify because it’s easy to use and has an app I can easily use to monitor it and also easy to transfer small sums into it. I’m sure there are plenty of similar platforms though.

also I personally would tell him about it and as he gets older let him see it once a year or so so he gets to understand how investing and compounding works.

I assume that was a typo for:
'I wouldn't do junior SIPP as the money won’t be accessible until he’s at least 57.'

It is very sensible to not let an 18 year old have access to many thousands of pounds. Personally I would wait until they are 21 or 25 to let them lose on it.
Not to say you can't give specific sums for things that are worthwhile, but they should not have regular access just to dip in and spend.

Yes, they are legally adult at 18. But mentally and emotionally they are far from adult. There is nothing immoral about a parent preventing access to the money until they are more mature.
When they potentially have a house deposit at age 25 they will thank you.

What is S&S? I know nothing about finance. The discretionary trust was discussed when I thought the money would be paid to me but now I’ve had it paid directly to him. He knows about it and knows he won’t have access until he’s an adult and that it’s to be used for uni/car/house or similar. He did immediately ask for a PlayStation 🤣 but was fine when I said it needed to be saved. He’d already had a small inheritance that I’d allowed him to spend from on his special interest. He is likely autistic and to be honest I’m not sure how independent he’ll be come 18 which is why I’m even more keen to make sure I do this right.

Ok so it's his money already and no restrictions on what age he can have use of it. You want it for driving lessons and a car first so perhaps 15k into a Junior ISA and 5k into a high interest savings account. Or half and half. Investments can go up or down so you need to decide how comfortable you are with risk. If £20k is a life changing amount of money for you/him then you may be more comfortable with cash savings.

Surely he has to have access to it at 18 whatever happens, as it’s his money?

Not if Mum says "No".

Technically, legally, yes it is his when he is 18.
In the real world, no.

I think the number of parents who would appropriate their child’s money is in the minority rather than being the ’real world’. At least among the people I know.

9k now, 9k in April into a junior isa, 2k in a fixed term bond reinvested as required for driving lessons or other education related expenses you can’t fund. With mine they knew they had money but i wasn’t explicite over the amount and I used it for university, I transferred everything remaining on graduation from university

Sorry my post should have said NOT in a SIPP.

S&S is Stocks and Shares ISA.

To those saying it’s unethical to not give them access to the money, you do you, I did what I thought was best for DC. It’s easy to stop them getting access you just don’t tell them it’s there and when they reach 18 setup a new email address in their name and manage it for them. Up to you how you do it OP, you’ll know your DC and how sensible they are. If they need it for a car and driving lessons then great however if it’s not needed then keep
it invested.

The only thing do need to be aware of is the amount of savings that they have in relation to benefits. Can’t claim UC with more than £16k.

No one is appropriating money, they are keeping it safe for their DC for when they are mature enough to have it.

That word 'appropriate' - I don't think what you think it means is the actual meaning.

A better word would be 'safeguard'.

When their parents decide they’re mature enough to have it.

Which is treating adults as children.

It’s not up to parents to decide. It isn’t their money.

Bring your kids up so they don’t waste money at 18!

It’s his money so I don’t think you can direct how he spends it if he wants a PlayStation, he can have one surely?!

Deciding when your children are mature enough to have a particular sum is what you do when it’s a gift from you. I save in my own name for my children for exactly this reason and they won’t know anything about it until I judge them sensible. But money he’s inherited from someone else is not the parent’s money to withhold, even if they dress it up as safeguarding. The only moral action is to put it into a decent account or other investment that becomes his on his 18th birthday if he has capacity (which it sounds is exactly what OP wants to do, all credit to her).

One meaning of the verb appropriate is to take or withold, typically without permission.