Investing for your kids.....

hi,
my daughter has come into some money from a distant relative (a few thousand) and i want to know what's the best thing to do with it.
had a quick look around and isa's seem to be a no go (that's what i initially intended to do). she has a post office account but i don;t think the interest is much cop on that. the best savings rates are for regular investments up to £100 a month and only pay out the high rates for a year - i guess i could open a normal bank account along with loads of high interest ones and then set up a bunch of standing orders but i'm not sure you can do that with kids accounts.
child trust funds (effectively kiddie cash isas) are out as she was born in 97.
anyone have any other ideas (other than silly - give it to me schemes).
the money is in her name so bunging it in an isa in my name isn;t possible without some hoop jumping.
best i've found so far is a 1 year bond paying out about 5.5%. i'd rather not tie it up for longer than unless there is a very good deal guaranteed.
another option would be to start her off a pension but i'm not sure if it's worth it with the amount there is.
so i open it up to the wisdom of the 'gain.....

 

nick it.

how old is she? Surely if it can be tied up in shares via a low cost tracker fund for the best part of 15 years it must do well.

 

Julian,

Why not a mini cash ISA ? IIRC you can put in £3k per tax year.

Jeff

 

Why are ISAs a non starter? Can you not just invest the money in your name in either a FTSE all share tracker if you want a fuss free investment, or an actively managed fund (UK equity income sector would be my choice) if you are prepared to monitor the fund managers performance.

over the long term (10 years minimum) you will most likely have significantly better performance than either bonds or cash, and a big pot of money for you daughter when she most needs it.

 

a pension? that's an interesting idea.

they say that you need to double the size of contribution every five years you leave it before you start a pension.. so... say a pension of ...£100 a month is what you need as an 18 year old, £50 at £13.. £25 at 8...

shit, think I'll start one for our kid!

 

I put some money in a Abbey 'Esaver' account which at the time had pretty good rates and you can draw it when you want.

 

keeping it simple means keeping it in her name and isa's are only available for over 18's (she's 9).
i'd prefer to invest it in something like shares or a tracker and let it get some inertia behind it for a number of years but it's working out the best way of doing that without getting into the trouble of transferring what (hopefully) will be a substantial amount of cash from me to my daughter when she needs it and all the tax / capital gains horrors that implies.

 

Put a small amount in Premium Bonds. It's always worth a punt and no risk involved.

 

Actually premium bonds do not bear scrutiny. People always harp on about 'returns' that include factoring in the big prize. Take that out of the equation and the 'return' is poor. Plus some people (me included) have had premium bonds since the sixties and won nothing to date!

 

She can always hold unit trusts outside of an ISA in her own name. OK, she may be liable for GCT, but seeing as the CGT allowance is currently about £8K per year and will likely increase with inflation, It should be relatively easy to take out money in several chunks to avoid CGT.

 

A nice new Teac Esoteric cdplayer

Come on man, get your priorities in order!

 

this is why i want to keep the money in her name - you see there are these bikes called nicolai's and.....

 

hookers and crack!

 

Hmm yeah...I'm still waiting to get something back for my £100 worth of premium bonds I bought a few years back. Still, the chance of winning a million has kept me from cashing them in.

 

Agree with Robbo - invest it in shares (in her name, not in an ISA) & when it comes time to cash in, sell in chunks such that you don't make more than £8K (probably more than that by then) capital GAIN in a single tax year.

 

Buy her a rail card while she's still young enough! Send her over to Asia to live on a few pence a day. She's too young to be worrying about investing etc..

 

pmsl at your post mo. i'l tell you what I'd be over the moon if she decided to use part of the money to go traveling when she's older though.

 

9 years old? Get her a mortgage, use the money as a deposit on a house.

-- Ian

 

Agree with Robbo & MO!
Invest in shares.
In another 9 years time, give her enough (of her own) cash to fly to Kathmandu, & then onto Thailand on a budget of £10 a day max (I'm taking inflation into account here) & go have an adventure.
If she refuses, don't give her nuttin' (tell her it's part of deal - the money has to be spent offshore etc...)
Perhaps she should go with someone else (maybe male....GULP!).

And then give her enough (of her own cash) to go to Uni.

...Then hope she'll look after you in your old age with what's left over.

FWIW I was in a similar position to your daughter some years ago and spent the money 'on the road'.
There was nothing left for Uni afterwards....but it had been sitting in a bank account for a decade, rather than in shares....