Investing for my daughters future
September 5, 2006 7:14 AM Subscribe
A question for UK based Mefites... My girlfriend has recently given birth to our first child, and we've received our £250 surestart from the government. I'd like to invest this money sensibly, in an account that pays good interest, allows me to top up whenever I want, and restricts access until my daughter is 18. Does anyone have any experience and recommendations. Thanks in advance
Best answer: Stick it in a child trust account - which is what it's for. I'm actually not sure you can do anything but put it in one of these, come to think of it.
Basically you've a number of options, with all the major players offering them. Different levels of risk apply, so you can go for either a stakeholder option (stockmarket based - higher risk) or a non-stakeholder option (basic interest).
See the Abbey version for a bit more info. We went with this as their stakeholder option has had good press.
posted by StuMiller at 7:34 AM on September 5, 2006
Basically you've a number of options, with all the major players offering them. Different levels of risk apply, so you can go for either a stakeholder option (stockmarket based - higher risk) or a non-stakeholder option (basic interest).
See the Abbey version for a bit more info. We went with this as their stakeholder option has had good press.
posted by StuMiller at 7:34 AM on September 5, 2006
Response by poster: I'd never thought about that to be honest, but now you mention it, I would like the investment to be ethical..
posted by the_epicurean at 9:12 AM on September 5, 2006
posted by the_epicurean at 9:12 AM on September 5, 2006
Best answer: Congrats! My sister just had her first and is wrestling with this problem too.
I would say that you should take some level of risk with it and open a shares CTF rather than a savings or stakeholder one (the 3 accounts explained). My reasoning is that (a) the opportunity cost of an investment going bad is quite low (compounded £250 over the time period), (b) over 18 years markets outperform savings and (c) you've got lots of time (18 years!) to ride out bad patches. What's more (is that (d)?), the CTF doesn't automatically redeem after 18 years, it just passes to the child, so there's no risk of being forced to sell up in a bad market. A Stakeholder account will only invest in a FTSE tracker and will "lifestyle" the investments so that as your daughter's 18th birthday approaches the holdings will be switched into cash. I suppose that's handy but perhaps not strictly necessary.
I like the idea of a shares CTF for the financial literacy argument as well - your epicuriette can follow the ups and downs of the fund as she gets older.
You/she can always switch providers and account type later if you are unhappy with the results.
Which account specifically is more tricky. One the one hand it's not your money to muck about with, but on the other hand it's possible to make some informed, though not riskless, choices
Diversification is always important but given you've got an 18 year horizon and that you can switch investments (with a cost though) I would be in favour of sticking it in an industry or area of the world that you think will grow. Have a look at F&C's funds and see if there's one you like. (sorry, no ethical option I can see there though). Alternatively, you can research ethical funds and when you find one you like the look of, you can purchase it through a SelfTrade share-only CTF. The selftrade account is basically just a wrapper for any investment you like - it gives you a lot of freedom (which = a lot of responsibility) but you'll have to do the research legwork.
posted by patricio at 10:06 AM on September 5, 2006
I would say that you should take some level of risk with it and open a shares CTF rather than a savings or stakeholder one (the 3 accounts explained). My reasoning is that (a) the opportunity cost of an investment going bad is quite low (compounded £250 over the time period), (b) over 18 years markets outperform savings and (c) you've got lots of time (18 years!) to ride out bad patches. What's more (is that (d)?), the CTF doesn't automatically redeem after 18 years, it just passes to the child, so there's no risk of being forced to sell up in a bad market. A Stakeholder account will only invest in a FTSE tracker and will "lifestyle" the investments so that as your daughter's 18th birthday approaches the holdings will be switched into cash. I suppose that's handy but perhaps not strictly necessary.
I like the idea of a shares CTF for the financial literacy argument as well - your epicuriette can follow the ups and downs of the fund as she gets older.
You/she can always switch providers and account type later if you are unhappy with the results.
Which account specifically is more tricky. One the one hand it's not your money to muck about with, but on the other hand it's possible to make some informed, though not riskless, choices
Diversification is always important but given you've got an 18 year horizon and that you can switch investments (with a cost though) I would be in favour of sticking it in an industry or area of the world that you think will grow. Have a look at F&C's funds and see if there's one you like. (sorry, no ethical option I can see there though). Alternatively, you can research ethical funds and when you find one you like the look of, you can purchase it through a SelfTrade share-only CTF. The selftrade account is basically just a wrapper for any investment you like - it gives you a lot of freedom (which = a lot of responsibility) but you'll have to do the research legwork.
posted by patricio at 10:06 AM on September 5, 2006
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Just had a daughter in June and was going through the same quandry myself. Ended up reading this article which gives some good advice on what is the best around. It's updated regularly as well.
posted by lloyder at 7:32 AM on September 5, 2006