Fairest way to invest for different aged children

[Maaate]

We are in the fortunate position of having £20k that we would like to put into ISA's for our 2 children to access when they turn 18 - but we can't decide on the best way to split it.

One child is 14 and the other is 7 so obviously the elder won't see as much benefit from the interest accrual as the younger. What do you think would be the best split to make or should we just keep it as a 50/50 split?

Why not give £15.5k to older child, and £4.5k to younger one, but add £1k to youngest child's ISA each year until 18.

The fairest way is to invest £10k each for them today.

im assuming you don’t actually want them to spend it at 18, so the sum it has grown to by then is irrelevant really.

And of course, if it’s invested you can’t predict the growth anyway so how could you be truly ‘fair’ with opting for larger / smaller contributions? There could be a stock market crash after one has claimed there’s, but before the other has.

I understand what you're saying about the years in the market being different for each child, but do you actually want your 18 year old kid to spend £10k plus whatever growth? It would be more sensible for them to leave it for a house deposit etc. So who's to say that the oldest child will withdraw it first or not.
I imagine you can invest it in exactly the same funds, on the same day, but the actual day the child withdraws the money will dictate their growth - one could choose the top of the market, the other could leave it and have to deal with the consequences of a crash
It would be more fair to split it equally and let the future roll the dice

Keep it in your names as 18 year old tend not to make wise decisions about money.
Give it to them when they need a car/uni rent/house deposit
So no need to divide at this point, just have one fund

This isn’t true, lots of 18 year olds are sensible as long as their parents have put in the time to educate them on their finances.

if it is for your children you should put it in a child’s account to safeguard the money from your own finances, save your personal tax allowance and children’s accounts tend to have better interest rates than adult ones.

I would just split the money down the middle especially if you are going to invest instead of save. There is no guarantee that they will end up with the same money

I would keep it in an ISA and give them the same amount at a set age, say age 21. Or if I put it in a JISA I would estimate the compounded value at age 18 and then adjust/ top up based on their projected value at age 18 so they receive roughly the same. I would add around 12k to oldest and add 5k to youngest and save the rest in my ISA to top up where needed and review yearly and adjust. I've been doing this for my kids who have similar projected values as they get to 18 I'll make sure the eldest is overshooting slightly so I can keep an eye on youngest so they get roughly the same with a top up if needed. They're only 2 years apart though.

I would do slightly asymmetric £9000 to younger and £11000 for the older child.

£10000 over 11 years at 4% comes to £15500
Over 4 years £11,700 too
Difference of £4000

£9000 over 11 years 4% £13900
£11,000 over 4 years 4% £12900
Difference of £1000

Given that you can't predict interest rates and everything is varied this would give a good balance

I’d just split it fairly now. If you start trying to mess with predicting interest rates now you’d also need to factor in inflation. That same sum will be worth less to the younger one once they can access it. I think the fairest is to give them the same now.

Youngest will get presents for less years from parents and grandparents, you can’t make life fair son I’d just do 50:50 as giving a different amount is more obviously unfair. Although it’s a good teaching opportunity.

also house prices go up and up, i paid more for less of a house than an older sibling. You can’t even everything out, so just go with what’s obviously fair and don’t overthink.

How would you split it if they were aged 17 and 24?

Good question from @2thumbs My PILs created trusts from their inheritance - one in each DS's name.

The easiest thing is to put £10K in a Jr S&S ISA for each of them. Obvs, DS14's will convert to an 'adult' ISA sooner but markets rise and fall and also he might choose to leave it to grow or transfer it into a LISA. You have 4 years to teach him about 'parking' money for it to grow and 7 years (give me a child for 7 years ...) to teach the younger one even more!

Splitting it equally now is also a good option b/c it seems 'fair' - everyone will understand - but I take your point completely about how the younger one may benefit more so I also comprehend the idea of splitting it unequally to adjust for that.

I also like @redfishcat 's idea: keep it all together and in your name to disburse as you see fit. You could invest it in all sorts - S&S ISA or high interest bonds or other.

I'd be sure to keep a record of what you disburse to each so that you can even it out as necessary. This is what PIL have done for DH and his brother: if they took money from the trusts for one brother, they gave similar to the other as cash.