Saving for Children

8 is a bit young but you could consider involving her in investment decisions, learning how to manage money is useful in itself. £100 a month for ten years is £12k, a useful amount but not that huge given the way things are going. If you choose cash investment that's about what it will be worth in real terms at the end, maybe a little more. Also one problem is that childen can't have ISAs and income over £100 a year will be taxed as yours. An equity-based investment could be worth a few thousand more, with some risk of it being less - but over ten years and starting from a low base the risk of that is fairly low. Or you could of course have a mixture. One option for the equity content is a broad-based, low-charging investment trust like Witan or Alliance, although there are many others.

To quote JB ... aaargh!!! It may well be that *you* need life insurance, but standard term insurance is probably the way to go there. It's very unlikely that your daughter needs life insurance ... and the tax free status is pretty irrelevant given that your daughter is very unlikely to be a taxpayer anyway. Well, that assumes the money is in her name, if you want to keep it in your name you need to consider your own tax status, but even so insurance-based investments are generally not useful unless you are very rich and you've used up all your other allowances.

Yes, I agree, 8 is a bit young for that. Mind you, it's also a bit young to presume she will (want to) go to University...

That's not a problem. Daddy can hold the ISA in his name on the daughter's behalf (that is to say with the intention of gifting her the loot when the time is right). He's only investing £1k2pa, so with mummy he could afford to save up on behalf of 5 kids.

Love it. The only thing better than thus quoting him is seeing him say it himself.

Let's see if a few buzzwords won't bring him out of the woodwork. MIRAS, Endowments, APR, bifocals, old age, follical challenge, varifocals, Popeye, discounted cashflows, retirement, rental yields, banking in the old days, banking today. That last one'll flush him out, I'm sure.

If she doesn't want to go then I get the money ;-). But seriously the missus and I are next to useless at saving money the traditional ways i.e. bank accounts but have always done okay with long term plans. We don't mind taking a risk and going down the equities path as long as the policy allows switching around into less risky waters nearer the end.

thanks chaps it's much appreciated.

Bal

I like the sound of that. If you buy a yacht, though, she might decide to take up sailing.

Investment trusts are companies whose shares are traded like any other shares. This means you can sell at any time (with standard trading charges and stamp duty) although the share price will vary from day to day. Most ITs can be bought via a broker or via an in-house savings scheme. The savings schemes tend to reduce trading costs for small investments (e.g., 100 pound per month won't attract a £10 fee/month because the scheme will get a big discount from its broker). You can sell the investment in the trading scheme fairly easily, but not usually that quickly (typically a few days after you send them a letter).

I'd look at the ITs Steve suggested such as Witan, Alliance and other generalist trusts such RIT Capital partners, British Empire Securities, F&C, Law Debenture, Fleming Mercantile, City of London and so forth. They'll probably be a trust to match your risk profile and style of investment. £100/month would also allow you to split into £50/month into two trusts (as most have £50/month as a minimum investment) to further spread risk if you wish. For example, Fleming Mercantile has a mix of smaller and larger cap stocks, while City of London tends to have big FTSE 100 stocks.

Thom

If you're still around, search the uk.finance archives as the subject is discussed regularly and there are links to relevant products/information -

Daytona

There is a downloadable (6.4Mb in pdf format) supplement "Investing for Children" on the Moneywise site:

f

Depends on the child :)

You can probably assume that she'll want money for something ...

That's true, but of course then he can't use the allowance for himself. Also while you can make a mental note that the money is hers you can't earmark it in any formal way. And to encash it you have to lose the tax advantages. On the flip side you can then stop her getting it if you think it might be misused.

You forgot Captain Beefheart!

The sacrifices parents have to make ....

Absolutely. "You either go to university, darling, or I keep my money!"

Captain who?