Reply to: Childrens ISAs

[TheCyclingProgrammer]

Doesn't saving for your children defeat the object of parenting?
You're supposed to be teaching them. Give them money, and they can save some of it themselves. If they don't save stop giving.

Isn't that effectively the point of a Junior ISA? You are giving them the money, except you're also investing it for them and they can't access it until they are 18.

That's where the teaching them about the value of money bit comes in. If you're worried about what they'll do with it when they are 18, then you have from now until then to teach them to use it sensibly.

[Lance]

Doesn't saving for your children defeat the object of parenting?
You're supposed to be teaching them. Give them money, and they can save some of it themselves. If they don't save stop giving.

I'm not suggesting that you don't help them out with house deposits, or university fees, but don't save FOR THEM as they'll not learn anything and turn into snowflake millennials mk2 with no sense of personal responsibility.

[lukemg]

The problem people are highlighting that in a Childrens ISA it is legally their money, so while you can do your best to convince them to hold on to it for a house or car etc, if they want to take all their friends to prague with it you can't stop them

True that...2 mates from my youth got a few k at 18, both bought motorbikes the next week. Yeah, they are grown up, if you have raised them right blah blah.
Reality is that it's often a dificult transition from 17-21 and having some control of funds might be the only control you have.
Personal experience for an advert kid who has wobbled off the straight line in 2nd year of A-Levels.
Course if you are maxing out your own and missus ISA limits (40k+/year) then I guess you need somewhere to stash it...

[pr1]

So I'd probably say keep it to one side and let them ask for it if they need it - deposit on a house? no problem, Car? ok.. Massive party for all your friends in Prague. Probably not.

My kids currently have a few K each in those government trust funds (Will be about £5k ish when they hit 18) and 11k each in their bank accounts getting 2% the deal is that they can have the trust fund for a first car etc but the money in the bank accounts is for house deposits.

The problem people are highlighting that in a Childrens ISA it is legally their money, so while you can do your best to convince them to hold on to it for a house or car etc, if they want to take all their friends to prague with it you can't stop them

[Snarf]

It is in bricks and motar until the wife and I kick the bucket. Then they have their inheritance rather than a piddling 10 or 20 grand each.

Cant tell if you are joking or not...

I'd rather be able to give the kids something when they are at the age when they are moving out into the world on their own and need a boost instead of when they are middle aged and have no real need of the money.

[Snarf]

Setup similar but now oldest is nearly 18 I am very wary of handing over thousands in cash to finance some 'interesting' lifestyle choices AND you have to hand it over....
Time again, I would retain control and dispense accordingly to maintain very limited control.

When I first read that my initial reaction was that at 18 your child will be old enough to live completely independently and if you're really giving it to them then you should just trust them with it.

THEN I remembered what happened to my sister and I... We both got trust funds which became available after x years, as it worked out mine was available when I turned 20 and my sisters when she turned 18. I used mine to pay the legal fees and some of the deposit on my first house, she pissed hers up the wall on McDonalds and cheap vodka!

So I'd probably say keep it to one side and let them ask for it if they need it - deposit on a house? no problem, Car? ok.. Massive party for all your friends in Prague. Probably not.

My kids currently have a few K each in those government trust funds (Will be about £5k ish when they hit 18) and 11k each in their bank accounts getting 2% the deal is that they can have the trust fund for a first car etc but the money in the bank accounts is for house deposits.

[ITcon]

I found the saving products outside ISAs were better even with the tax savings

[lukemg]

Setup similar but now oldest is nearly 18 I am very wary of handing over thousands in cash to finance some 'interesting' lifestyle choices AND you have to hand it over....
Time again, I would retain control and dispense accordingly to maintain very limited control.

[DeadEyedJacks]

For those worried about offspring blowing an ISA at 18, then you can always fund a pension for them...
Odds on you'll be dead before they can access it :-)

There are plenty of reasons to give your money to your children early and not keep it yourself;
Ringfencing it in tax efficient wrappers is just sensible.
taxes, inheritance, divorce, benefits, long term care
Once it's theirs it's no longer yours...

(For the record offspring have Children's savings, regular savers, Junior ISAs both cash and shares and Pension funds.)

[WordIsBond]

Do you need it to be an ISA? Unless your kids have considerable income, they're not going to be paying tax on their savings in any case.

No, but if you make £250 / month contributions starting when they are born, it's going to rack up pretty nicely, and once they start working, they might well be paying tax on some of that interest. ISA protected savings will stay ISA protected forever (unless someone stupid gets elected, I suppose). Won't matter when they are young but might matter a lot later to have it within an ISA.

[WordIsBond]

I see no reason at all to put this in a low interest Children's ISA.

If you see this as a long-term thing that is going to be there for years, inflation is going to eat all of your interest. Put it in shares, probably a tracker. Over the long term, in most scenarios shares are going to be superior to a low-interest cash account.

If it is shorter to medium-term, then the little tykes probably aren't going to have a big enough balance to breach the £1K savings threshold. In that case, you may want to stay in cash. Use a regular saver, and every year roll it into a 1-3 year bond to chase a little better interest. A cash ISA only makes sense if the balance grows enough to have taxable interest income, or if the ISA pays more interest than you can get outside an ISA wrapper. Until the balance gets high enough that it matters to be tax exempt, chase the interest rate, not the tax exemption.

You could use the regular saver every year, and at the end of the year roll it into an ISA.

All that said, once they hit 16, it's time to start racking up the Help To Buy ISA. That should be maxed out. List of providers here: https://www.helptobuy.gov.uk/help-to...in-the-scheme/

[pr1]

It is in bricks and motar until the wife and I kick the bucket. Then they have their inheritance rather than a piddling 10 or 20 grand each.

lol

[northernladuk]

My one offspring is at Uni, we put £200/month into a Help-to-Buy ISA for the 25% Government bonus.

Nobrainer really.

Is that through the hqlifqx or do they all offer it. The rates dropped on those didn't they?

[pjclarke]

My one offspring is at Uni, we put £200/month into a Help-to-Buy ISA for the 25% Government bonus.

Nobrainer really.

[mudskipper]

Do you need it to be an ISA? Unless your kids have considerable income, they're not going to be paying tax on their savings in any case.