20i Domains

Best saving method for kids?

Discussion in 'General Board' started by Ben Thomas, Aug 1, 2021.

  1. Ben Thomas

    Ben Thomas Well-Known Member

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    Hi,

    I'd like to save a great deal of money for my children, which perhaps can't be accessed until they are a certain age. Can anybody provide some good advice on where/how to save this money? Best interest etc.


    Thanks
     
  2. Domain Forum

    Acorn Domains Elite Member

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    articles.co.uk
     
  3. jasman United Kingdom

    jasman Active Member

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    The problem with Savings accounts is they are really 'Losings' accounts as they pay less than the rate of inflation so the sum saved gets smaller every year in real terms. The real rate of inflation is significantly higher than the concocted figures the government give out, especially if you include house prices (and why wouldn't you - most of the money in the country is tied up in property so if all that wealth - most of the wealth in the country - is increasing at say 5% per annum on average and your money in a savings account is getting 0.5% which is taxed(!) you are losing a lot of ground every year). If the figure you want to save is enough to buy a house you could do that and let it out in the mean time which would also generate an extra income.

    Otherwise you might consider buying gold coins e.g. sovereigns etc. There is some fluctuation in their value but over the long term they should broadly keep pace with inflation and the gains if you sell are tax free. And if there is a financial collapse in the future (if we keep getting more lockdowns it's going to happen) or a period of high inflation (they keep creating new money like there's no tomorrow) you will be glad you have real assets rather than paper money rapidly dwindling in value.
     
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  4. Ben Thomas

    Ben Thomas Well-Known Member

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    Thanks jasman. I was thinking actually of maybe diversifying the portfolio into stocks, shares and crypto. Maybe gold coins would be an idea though.
     
  5. ian

    ian Well-Known Member

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    Invest in stages into an index fund like the Vanguard FTSE Global All Caps fund. Averaging 8% per annum. Most banks offer this service; you might want to maximise a Junior ISA first which will be locked until they are 18 years old. I pay in monthly to my sons account for both this fund, and crypto.
     
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  6. diablo

    diablo Well-Known Member

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    The inflation figures typically given only measure one aspect of inflation: consumer price changes. House prices aren't included in the CPI because they are not consumed at the time of purchase. HPI measures house price inflation.
     
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  7. Ben Thomas

    Ben Thomas Well-Known Member

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    I did have a look into Junior ISA's last night, is this limit tax free? Is that why it's so small (in relation to, say, a property). Is there anything stopping me opening multiple ISA's for same child?

    EDIT: never mind, just read about the £9000 limit across all accounts for this tax year. Certainly property investing is more lucrative, but means I'd have to front a larger sum initially which I don't think I'd be able to achieve currently. Crypto and stocks seem like a better idea than a junior ISA. Banks really have terrible interest rates, I really don't know why people think it's better to hold cash in a bank than in low risk investments.
     
  8. ian

    ian Well-Known Member

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    It is a combination of not knowing any better/different, or just looking for a safe heaven (and perhaps not realising their money is worth less with inflation). I believe Junior ISA's just like normal ISA's have limits (and apply across all ISA's), but any gains are tax free, so worth using up first. Stocks are one thing, but Indexes offer a wider exposure and I'd say much safer than picking individual Stocks. Crypto is just an outside punt, perhaps look at 5-10% in Bitcoin. Not financial advice.
     
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  9. Jordan United Kingdom

    Jordan Active Member

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    I would say a Junior SIPP is also a good option, annual limit is £3,600 which you'll get tax relief on.

    It doesn't sound like much but have a play around with a compound interest calculator over a 50 year period and it may suprise you.
     
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  10. jasman United Kingdom

    jasman Active Member

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    You need 25% down for a buy to let deposit. So depending on the part of the country you are in this could be as little as £25k for a £100k property. There are some one-off fees too at the beginning like stamp duty and solicitors fees etc but for many parts of the country you wouldn't need a huge amount of money to get started. Then you'd get a regular rental income + steady growth in equity. You could even give your kids the house one day.

    With many investments you could be left with a worthless piece of paper. Shares can become worthless if the company goes bust, pensions can become worthless if the pension fund collapses etc. But a property is a tangible asset that is permanently valuable (as long as you keep it insured!).

    As long as banks are allowed to create money out of thin air when they create new loans and mortgages via the fractional reserve system, the money supply will keep ever expanding from all the new loans created each day and the currency will continue getting more and more diluted and falling in value. Real assets like property therefore inevitably go up in nominal value to keep pace with the ever diminishing value of the pound.

    People think inflation is 1% or 2% and isn't worth worrying about. This couldn't be further from the truth. My father-in-law bought his first house in the late 1960s for £3k. About 7 years ago he saw the same property up for sale for £300k. 100-fold increase in just one man's working lifetime. Or in other words the pound became worth 1% of its former value in that period. This is because before the credit crunch house prices had pretty much doubled in price every decade. This has slowed down a bit since then but it's not far off and is still a much better return than most investments with the added security of a tangible asset that doesn't have a risk of becoming worthless. See Figure 5:

    https://www.ons.gov.uk/economy/infl...sepriceindex/april2021#house-prices-by-region
     
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  11. M40 United Kingdom

    M40 Member

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    ftse 100 / sp500, property and one-word domains.

    Whats the point of giving a young adult a pot of money when they reach a certain age? So they can spunk it on holidays or gamble scam coins?

    Invest the money into the kids. Pay for the best education you can afford. Give them lots of experiences eg. piano / karate / whatever lessons. All this stuff will stimulate their young brains and help them reach max potential in terms of physical development like intelligence.

    The dividends on education and development will pay more in long run. Not to mention networking opportunities at private schools/universities.

    Rather than wasting time researching the latest get-rich-quick scheme, focus on your business so you can leave them tangible assets.