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I know similar has been done before, but here goes… My two (14.5 yr old) girls have just been very generously gifted £6k each towards their post-school education (university or whatever route they choose to take). They will have access to around £16k each by the time they reach that point (that we have been saving for them in ISAs) so they wouldn’t need access to this additional money straight away, but they may need to. So what is the best (lower risk as it’s not my money to play with) way to invest assuming they will need relatively easy access and they won’t need to touch it for three years?
Any help and advice would be appreciated,
thank you.
Premium bonds risk free monthly excitement
Probably a fixed term savings account or some form of National Savings bond?
You could get better returns, but that would be at the price of increased volatility, and with a lump sum initial investment over a medium term like this there’s a significant chance that the value would be down when they needed it.
I am not a professional etc etc.
Or just blow it all on coke and hookers and write them an IOU?
The top fixed term savings accounts are over 5% at the moment but interest rates expected to go down over the next year. https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#fixedsavings
As they've already got a good amount in low risk for uni and this may be even longer term I'd be looking at a S&S ISA.
Premium bonds are fun and there's a chance of winning, but very unlikely to do better than inflation.
Nationwide have an 8% regular saver currently, but only if you are a current account holder. And a kids account with unlimited withdrawals at 5%. Maybe set one of those up each and look for a regular saver above 5% each to farm the balance into?
post office has 3 year fix @ 5% - probably the best you'll get at zero risk
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
premium bonds will averge 4.65% but your realistic output will be closer to 3% (unless you win big) and the 4.65% rate is likely to drop over the next few years
There are very low cost investment platforms you can take out an ISA with, I use InvestEngine which is close to zero fees and you can take money out whenever you like. Mostly ETFs and company shares so helps if you have some interest in the Stock Market. I’ve had about 20% return this year but of course this may well not continue…
Savings a/cs and bonds are protected by gov uoto £85k per product.
I have some beanstalk accounts, they open a cash and S&S ISA. Most of lockdown not much happened (but my S&S ISA was similarly poor) .it's since grown reasonably. You can get cashback paid into it via kidstart.
YMMV IANAFA
Fixed term savings, but think about investing 1/12th every month across the year, and then rolling that over when it matures.
This will give you the highest, safe return, but its going to give you access to some of the funds on a monthly basis, rather than locking it all up for a year.
Probably looking at 4.5% currently with a recognisable name, as the markets are expecting interest rate reductions early next year.
Loads of regular savers are 5.5-8%, I d drip feed into those from an easy access account. Ulster pays 5.2 and is Natwest in all but name, I set mine up in 10 mins. The app based ones are easiest to manage.
The best regular savers are on mse forum, I reckon as rates drop The reg savers should stay high as they are effectively teaser accounts. If they become uncompetitive just move your money or stop paying in.
Warning, it's become a hobby....
Regular saver will not be best option for OP as the lump sums are available now; the interest on regular savers will, generally, follow base rate moves which are on a downward path; drip feeding is not efficient for OP - eg, £100/month for 12 months at 5% is equivalent to 12 months at 2.5%.
If it was me...3 year fixed interest rate bond; best are c4.8%.