My grandaughter will be hatched just before Christmas. I'd like to invest some money for her for later in her life. I'm not really up on finance. Any ideas? Thank you.
2007-12-03 03:12:57 · 9 answers · asked by Anonymous in Business & Finance ➔ Investing
Have you heard of Child Trust Funds? - This is a children's savings scheme set up by the government back in 2005, there's even a pot of money your son/daughter will be entitled to for the little one.
Type 'child trust fund savings' into Google and you should get all the info you need.
2007-12-03 06:06:24 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Yes, I bought my two National Savings & Investment Childrens Bonus Bonds - great tax free interest rate and cast iron long term investment, which you can buy more of if you want over the years. You have to buy them and name the parents as you are not allowed to hold them yourself. I assume this is in case people try to use them as a tax dodge. I have a another granchild due next year so am saving-up for that one too.
2007-12-03 03:25:22 · answer #2 · answered by Anonymous · 0⤊ 0⤋
SIPP (Personal Pension fund) .. as soon as she was born she was entitled to start reclaiming tax on her pension contributions.
If she has no taxable income, she is limited to maximum contribution of £2808 per year (to which the SIPP provider adds 22% (current year) from the Tax man, making a fund of £3600)
From next year the basic rate drops to 20% so (assuming the £3600 limit still applies) she will have to put in £2880...
Assuming the fund grows at 4% above inflation, then by the time she retires at 65 her fund will be worth over £1 million ... (actually £1,061,886 - and she would have put in a total of £187,000)
If she WAITS until age 20 before starting (and contribues at exactly the same rate) at 65 her fund will be worth LESS THAN HALF a million (actually £435,705) - for a cost of £129,600.
If she STOPS contributions at age 20, at 65 her fund will be worth MORE THAN HALF a million .. (actually £625,000) - for a cost of £57,528 ...
In other words, contributing LESS THAN half the funds for the
FIRST 20 years is worth more than DOUBLE the next 45 years put together ..
NB = what if she put the same money in an ISA and earned the same 4% over inflation ??
Well at 65, her ISA would be worth £848,622 .. i.e. some £213,000 LESS. ...
Oh ho you say - but Pensions are Taxed ..
Yep = so she takes her 25% lump sum (25% of £1,061,886 = £265,221 .. leaving approx £795k .. if we assume this is Taxed at £20%, Tax costs her £159,132 .. (£213k - 159k = 54k) .. so she is still approx £54,000 better off with the pension.
2007-12-03 03:27:04 · answer #3 · answered by Steve B 7 · 0⤊ 0⤋
I have always liked the idea of bonds. They take time to mature, but by the time the baby is 18 they will be fully matured and worth so much more than what you bought them for.
another idea is a CD at a bank. but it depends on how much you are willing to invest. The more you invest, the higher the interest rate is.
2007-12-03 03:21:58 · answer #4 · answered by Anonymous · 0⤊ 0⤋
We buy our grandson's premium bonds at Christmas and birthdays, with a small gift so they have something to open. It will never be mega bucks but the thought is nice and there is always that little chance of a win!
2007-12-03 03:23:41 · answer #5 · answered by Anonymous · 0⤊ 0⤋
why not invest in the ISA or a mini ISA. or open a account in the building society , and if you do open an account in one of these be sure to be a guarantor so if granddaughter's parents split they do not get their hands on it . you can also buy shares that way you can get dividends on the company.
good luck and congs,
2007-12-03 03:27:04 · answer #6 · answered by Bharat P 3 · 0⤊ 0⤋
I really like strip bonds. http://stripbonds.info/
You're basically buying a bond "stripped" of interest payments. So you're investing in receiving $X in whatever time frame you want.
I'd suggest looking at government strip bonds. They're relatively stable, but still their value will fluctuate if interest rates change.
2007-12-03 03:26:22 · answer #7 · answered by CHARLES R 6 · 0⤊ 0⤋
I don't know if American Century still has their gift trust fund, but I would check that out. Historically, it had a ver decent return +12%.
2007-12-03 08:14:17 · answer #8 · answered by A Trade A Day 1 · 0⤊ 0⤋
I like the idea of premium bonds, there's always the chance she could win loads more, you can add to it over time, it's completely safe and you can withdraw at any time. www.nsandi.co.uk or .com I think
2007-12-03 03:17:48 · answer #9 · answered by Paulo 5 · 0⤊ 0⤋