Children's Savings Advice

Watch out for this....

The Nationwide children's account has consistently paid very good rates. Currently

IIRC it's been above the BOE base rate for the last 5 years at least.

You may need to apply in branch.

No. You'll have to ask for a form BUT note the 100 rule as per Martin's post.

Don't think under 16's can have an ISA (needs an NI number).

I didn't know about that (but I don't have any children so it's not directly relevant)

Hypothetical questions:

If you had two children, could you give each of them X and then have them gift their amounts to each other - hence the gifts would not be directly from the parent?

Could you just give the money to a friend or other relative to give to your children?

Not so hypothetical, why is there this law? What is it trying to protect against?

Tim.

Nice idea, but I very much doubt it. In much the same way that AIUI parent gifting to grandparent who then gifts to child is not a work-around either.

Higher rate (40%) tax payers reducing their tax liability by "concealing" income-bearing assets in their child's account.

Like so many tax things, the £100 limit is not indexed and has never been raised (AFAIAA). E.g £8,500 pa is still considered "higher paid" for BIK purposes.

What's the earliest you want her to be able to withdraw the money ?

Daytona

Thanks Andy, I'll bear this one in mind if I go the BS route.

That'll be the R85 form, will it?

Ahh, ok, that makes sense.

Thanks again for your feedback. S

Hmm, good question. I suppose the best use (IMO) for the money would be for a house deposit, based on the state of today's house prices. With this in mind, I would be happy keeping the money locked away until at least her 21st birthday.

Many thanks for your time, S

Then according to the Barclays Capital study of stock market returns since 1899 there is a 93% probability of shares outperforming cash deposits over a 10 year period -

The long term average rate of growth is 5.2%. This is in real terms ie excluding inflation - so the numbers are in todays money terms.

I'd use and invest in one of the following, in order of personal preference -

High yield, buy and hold strategy High yield, change each year iShares FTSE UK Dividend Plus Jupiter Income Invesco Perpetual Income Invesco Perpetual High Income

Another thing you could perhaps consider is investing in a pension plan such as a fixed fee SIPP (which are better value for money than percentage charged stakeholders). On current rules, she will not be able to get at the money until 55, but such long range investing gives massive opportunities for growth -

hth

Daytona

Hi, yes it does help, thank you for the very detailed reply Daytona.

Happy to have helped - let us know if you need more details as if you've not used shares or funds before it can be confusing. Here and The Motley Fool discussion boards - are the best place for financial advice in the UK.

Compound calculators

Unfortunately the annual Barclays Capital study is no longer freely available online, the latest press release is here

Since most financial media companies publish a summary when the results are published, a few more details can normally be found by searching -

Cheers

Daytona