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I could do with some suggestions and ideas for a nice problem. My very lucky children (8 months old and 22 months old) are to be given £10,000 each by my folks to be invested until they are 18 or so and then used to help with education/getting on the property ladder/buying large amounts of recreational drugs/impressing girls (delete as appropriate depending on how good/lucky parents we prove to be).
The problem is that accounts designed for this purpose all seem to have exceptionally crap interest rates at the moment. My folks solution of preference is for my wife and I touse our cash ISA allowance for the next two years and then ring fence these accounts as the boys ourselves, but I'm a little uneasy with this; I'm not quite sure why. Anyone got any suggestions of ways to make this money work? I'm not looking for unrealistic returns, but an interest rate that an adult could receive would seem fair.
(I'm not sending it to Nigeria, sorry...)
If you're looking at an 18 year return period, you're probably as well investing in a shares ISA, as the tax free amount is a lot higher (a bit less than £6k and you can dump the rest into a cash ISA I think).
Alternatively, now is a good time to be investing in shares - a split between financial institutions, mining and pharmaceutical companies will more than likely yield good returns over that timescale - people will always need medication, money and raw materials to make stuff. Whilst there's a lot of noise about stock market losses at the moment, over a 10-20 year period, the stock market will outperform inflation.
Well worth contacting an IFA - they'll take a commission, but you'll more than get that back. I'm happy to recommend a good guy who has saved me thousands from the robbing bastards at Nationwide...
Be wary of ISA admin fees and withdrawal charges. They can be extortionately high. Also you may get better rates outside of a cash ISA
IMO ISAs are only really any good if you deposit the maximum allowed each year and leave them alone for years (decades), or if you use them for trading stocks and shares (profits protected from cgt) and possess Gordon Gecko level skills.
No point in ISA's they are SH!T, buy a block of gold and hide it / bury it somewhere. Gold has gone from $450 / ounce to $2000 / ounce in the last 10 years, better than any ISA.
No need to use up your isa allowance, as you can now get junior isa's (jisa) Google it for more info or drop me a message
Fizzicist, It's just over 11k maximum for an adult stocks and shares ISA, thus increases each year.
Wouldn't bother with Gold as it is unsustainably high at the moment. It'll probably stay there for a couple of years but unlikely to grow. Now is the time to invest in struggling but sustainable industries or commodities. Gold is now a safe haven.
Acidchunks - cheers, a shares ISA would be my vote for this situation.
I hear greece is giving a good return on bonds.....
IFA seems like a good route or at least a chat with your bank.
Or find a house and Buy it for them stick it on BTL and cross fingers.
Well....
I'm setting up a Bike racing team (me) and am looking for sponsors (free stuff) and also pit crew (your children).
Your 10k would be a small but handy investment in getting this venture up and running.
The return on investment would be countless/uncountable trophies, and a guarantee of a racing number board for each/some events I enter.
Email for more details....
DrP
Is an is a even necessary? They won't pay tax on the interest as they'll have no other income and the level of interest will be too low. Don't you just sign a piece of paper and get the gross?
Moneysavingexpert? Personally I'd split it and put some into cash so e into long term bonds and some in shares. You can get nearby 5% if you lock the money away for 5 years with some isas.
Is an is a even necessary? They won't pay tax on the interest as they'll have no other income and the level of interest will be too low. Don't you just sign a piece of paper and get the gross?
Moneysavingexpert? Personally I'd split it and put some into cash so e into long term bonds and some in shares. You can get nearby 5% if you lock the money away for 5 years with some isas.