Investing for kid's future

June 18, 2009 4:59 AM

UK finance question: Just become a dad. What's the most beneficial way to invest a small four-figure lump sum, plus all of my child's Child Benefit for the next 18 years?

Want money to earn as much as possible, with the hope it'll pay for his education in 18 years' time.
Please keep answers simple - I'm new to this game!

Thanks a lot.

posted by Blackwatch to Work & Money (6 answers total)

If your child choses to go to college, he/she will be SO THANKFUL that you can help pay. Thank you so much for doing this!!!!! It will allow your child to follow his/her dreams.

Of course I have nothing useful to say, I'm just a kid who go to go to the school I wanted to go to, even though it was expensive and we're not rich, because my parents started saving when I was born. All I know is that they used a special "college savings fund" designed exactly for this purpose.
posted by Cygnet at 5:58 AM on June 18, 2009

Best answer: Tough call, UK interest rates being unbelievably low at moment. It's not a great time to be starting savings or investments with any expectation of returns, especially if you want the capital to be safe. Have you considered a Cash ISA, just to put it somewhere tax-efficient until the situation reverts back in favour of savers?

Good luck, and congratulations!
posted by methylsalicylate at 6:06 AM on June 18, 2009

You should probably look into a Child Trust Fund to benefit from some additional government contributions and tax-free status
posted by Jakey at 6:08 AM on June 18, 2009

It might help clarify your thinking if you try to figure out how much money you'll need to have after 18 years to meet your goal of paying for education. Maybe take the current cost of attending a school you'd feel good about sending your kid to, learn about long-term trends in the cost of education, and make a rough guess of what it might cost down the road. Use a spreadsheet to make some projections, and develop a plausible strategy. You'll be making a lot of guesses about the future, some of which will be wrong; plan to review and adjust your strategy regularly. Don't expect to find a simple answer that lets you dump the cash into a single receptacle and forget about it for 18 years.
posted by jon1270 at 6:59 AM on June 18, 2009

You can hold up to £30k of premium bonds. While the return is not formally guaranteed, the probability is good that you'll do well over time. Plus: tax-free, government-backed and instantly-cash-in-able.

(This sounds a bit lunatic, I grant you, but go look and you'll find serious financial advice about this one.)

Just make sure they don't change the rules on you, like Ireland did.
posted by genghis at 4:18 PM on June 18, 2009

Response by poster: Thanks very much for all advice - very much appreciated.
posted by Blackwatch at 8:58 AM on June 22, 2009