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pdhmobile2016 Posted on 22/05/2020 20:59
Savings account
 
Just had a letter from Halifax saying the kids savings account interest rate is going down to something silly like 0.01%. so it got me thinking of there's a better place for it, day like bonds or ISA that tracks the stock market rather than individual companies, surely the stock market can only go up from here, so must be a winner winner chicken dinner!!
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UKLL1981 Posted on 22/05/2020 22:32
Edited On: 22/05/2020 22:35
Savings account
Maybe look at Investec or Marcus.

Investec will give you 1.2% interest but you need to keep over £10k in the account. Marcus has no minimum amount and will give you 1.02%

Iím assuming kids can have these accounts or just open them in your name and put their money in there. The high street banks are a waste of time.

Cash ISAs arenít much good other than for avoiding capital gains tax if you have loads of savings. Stocks and shares ISA are good but a gamble obviously and donít know if a kid can have one. I get about £1600 a year in dividends for £30k of gsk shares.
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mikkelbecksmum Posted on 22/05/2020 22:41

Savings account
Stick it in premium bonds x

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Cleveleyssmoggie Posted on 23/05/2020 09:38
Edited On: 23/05/2020 10:18
Savings account
If you are happy with the Halifax open one of their Junior ISAís.

Edit. Stocks and shares obviously, not cash.
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turnoffsaysthestar Posted on 23/05/2020 10:13

Savings account
Raisin appear to offer some of the best rates but for the welcome bonus you need £5000.
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Emmersons_BrazillianDong Posted on 23/05/2020 12:23

Savings account
Mate if it's for the kids and you're genuinely not going to need access to it then you'd be crazy to put in a cash savings account or premium bonds. You'll kill your returns over the long term

It should be in a very low fee fund. Look at Vanguard for simplicity and cost. Do your own homework. Some great advice on reddit/uk personal finance.

Both my kids are in a vanguard ready mix called lifestyle 100. The 100 refers to the percentage of your money that's in stocks and shares rather than safer, lower yield options.

They do have a variety of mixed funds if you only want 80/60/50 % of your money in stocks and the rest in bonds etc.

Reason I chose this provider was that the funds are already there. You just choose so no having to do tons of research yourself. Fees are incredibly small too.

Even a very small increase in fees kills your returns over the long term
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pdhmobile2016 Posted on 23/05/2020 20:29

Savings account
Emmersons, does the account you have track the stock market or actually invest in companies?
One of the lads at work has an account that tracks the American stuck market, with a average return of about 5% over a year
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Emmersons_BrazillianDong Posted on 23/05/2020 22:44
Edited On: 23/05/2020 22:46
Savings account
Its a passive fund mate and tracks an index rather than individual stocks [^]

This is just the one that I have for my kids - its much more UK focused whereas I have one for myself that is much more US heavy - again from Vanguard.

I did a fair amount of research and what keeps coming up time and again is keeping fees low as possible as that eats into your earnings ridiculously.

Also whilst I want my money to work as hard as possible - I have zero interest in picking stocks and trying to beat the market. Sure a tiny minority of people can manage that - but the research I did showed that something like 95% of active fund managers are not able to beat the indexed returns despite high fees.

Long term, consistent investments even if small and low fees. Plus its very simple too [^]

EDIT - For the cynics; I have no link to Vanguard and I don't get a penny for mentioning them or recommending them. There may be other providers but I know these are a global company with an interesting and smart founder in Jack Bogle.

Link: info sheet
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Anton_Berg Posted on 24/05/2020 07:39

Savings account
'surely the stock market can only go up '

Equity based products are not for you. Look at National Savings icl Premium Bonds.
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pdhmobile2016 Posted on 24/05/2020 18:28

Savings account
Obviously I know they can go up and DOWN, what I meant was in the current situation, the virus and the amount the markets have fallen, the only way is up, the whole markets can't just go down to nothing and stay there.
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Johnny_X Posted on 24/05/2020 18:36

Savings account
The stock market could get lower and in the short term probably will. There are a lot of companies not paying divis this year. Always hits share prices. We could even see deflation at some point. Its going to be a wild ride for the next few years.
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Cleveleyssmoggie Posted on 24/05/2020 18:59

Savings account
Pdh,

There will still be a lot of volatility, due to covid and the idiot in the White House. If you invest for 5 or more years you should make money for your kids, especially if you use a tax free wrapper.
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turnoffsaysthestar Posted on 25/05/2020 09:03
Edited On: 25/05/2020 10:23
Savings account
I also use vanguard as do most of company pension funds/financial experts or a similar product.
20% shares 80% bonds low risk
40%shares 60% bonds low to medium risk
60% shares 40% bonds medium to high risk
80% shares 20% bonds high risk.
Also your age should be taken into account as the older you get the lower the amount of risk you should take.
Charges can take a lot as quoted above
Financial advisors also take a lot of money out of a pot i was quoted £7000 and a £1000 a year for looking after my pension, i did it myself for free.
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Support_Your_Local_Team Posted on 26/05/2020 21:31
Edited On: 26/05/2020 21:32
Savings account
We're in our mid-30's and want to start tucking away £200pm as a starting point. We're happy to keep doing this for the next 15/20/25 years as necessary.

Would one of these funds be the best thing for us?

We have no outstanding debt.
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Emmersons_BrazillianDong Posted on 26/05/2020 22:22

Savings account
Put simply - Yes it would.

Choose your risk profile and chose a fund.

It's worth saying that you can also have a timed style fund. So for example you know that you want to have an end date such as 10/15/20/25 years then you can choose that fund and they will automatically moderate your ratio of stocks (more risky) to bonds (safer and less volatile) as you get closer to that end date. So they do the balancing for you to minimise your potential volatility as you get closer to your target date.

That target date isn't necessarily pension age etc, could be for a child's 21st birthday or whatever.

You would be amazed just how dripping £200 per month into a fund can appreciate over time.

I totally understand that some people are weary given the current situation but you have to consider the long term.
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truck Posted on 26/05/2020 22:52

Savings account
supportyourlocal, don't forget your pension, you get tax relief on payments in and currently can take up to 25% when you retire.

Your retirement date does not have to be the state age if you have a personal / company fund.

If your company has a salary sacrifice scheme for pension then use it, this saves on tax as for tax purposes whatever you put in is taken off your salary before any calculation of tax /NI contributions. so you putting £200 away of taxed income could be £250 pre-tax if your a 20% taxpayer.

Even if you want to split your money with 50% part into pension and 50% into other investments.

Pension companies invest typically splitting the money into funds that are different risk levels. Higher risk = higher rewards, when your younger 80% say goes into higher risk / rewards funds 20 % say into more stable markets. As you age they alter the ratio so funds move more to medium - low as you close in on target age so money less at risk.

A typical average return over time in pension funds is 5% p annum minimum.
£100 month grows to £60K at this average return rate, and you can have 25% tax free at the end. So I would say put extra into the pension and then invest elsewhere as well as others have said where you have access to the money as once it's in the pension fund cannot get to it get to it until 50 years old currently.
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Support_Your_Local_Team Posted on 27/05/2020 07:47

Savings account
Cheers for the info guys.

We're both teachers and our pensions are automatically sorted. We pay some and the employers pay more. I'm happy with how that's going.

I think I'll have a look at Vanguard and see what options are open to us.

Cheers. [ref]
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Cleveleyssmoggie Posted on 27/05/2020 08:44
Edited On: 27/05/2020 08:45
Savings account
You can make, or lose a lot of money over your timescale.

Take independent professional advice.

Link: Link
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