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Giving to Infants

Investment discussion for beginners. Why you should invest your money, get help getting started
Kipling
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Giving to Infants

#127879

Postby Kipling » March 24th, 2018, 10:49 pm

Hi,
I've a question I'd like to throw open to the floor,
I've set up a Junior ISA and Junior SIPP for my son, now two. Broadly I fund the SIPP through a monthly direct debit, and gifts from relatives go into the ISA.
I set them up with a threefold aim in mind:

To at least maintain the gifts's buying power,
In the case of the SIPP to provide a safety net,
To educate my son in investing in the years before he has access to the money, and to, hopefully, make a better informed long-term investor.

I've another child due in August and I was wondering if I should do exactly the same again or if I should try something different, or indeed if there are any alternatives?

Any thoughts?

K

tjh290633
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Re: Giving to Infants

#127880

Postby tjh290633 » March 24th, 2018, 10:54 pm

There is a principle which says that what you do for one, you should also do for the other(s). I would be inclined to follow that rule.

TJH

melonfool
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Re: Giving to Infants

#128178

Postby melonfool » March 26th, 2018, 11:27 pm

"I've another child due in August and I was wondering if I should do exactly the same again or if I should try something different, or indeed if there are any alternatives? "

Well, you could put it up for adoption?

Presumably what you are asking is whether there is another way to invest for them - we can't really help you with the moral issue!

However, what you could probably do is review these:

"To at least maintain the gifts's buying power,
In the case of the SIPP to provide a safety net,
To educate my son in investing in the years before he has access to the money, and to, hopefully, make a better informed long-term investor."

If these no longer apply, or do not apply to the next child, then don't bother to save/invest for them. Be prepared to answer some questions when C2 reaches age 18......

In terms of investment - neither an ISA nor a SIPP is an 'investment', they are just wrappers for money, both with certain types of tax treatment. The *investment* is what you put in it, so talking about that might be useful?

I can't think of much else useful to do - buy property I suppose is a consideration?

Mel

Kipling
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Re: Giving to Infants

#165449

Postby Kipling » September 10th, 2018, 10:48 am

Just a quick follow-up,
Having had a look around at the market and been tempted by iWeb and Vanguard I found the best fit for her was a Youinvest Junior SIPP and Junior ISA. Broadly the Junior ISA receives gift money/ inheritances, etc and is accessible at 18; the Junior SIPP is direct debited from my account until bubs reaches 18 and then if they are in education I'll carry on until they are finished, or just let them take over funding it through until they are ready to start drawing it down.
Regards,
K

Howard
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Re: Giving to Infants

#165458

Postby Howard » September 10th, 2018, 11:58 am

I agree with tjh’s rule of doing the same for both. As a grandparent, I’m considering setting up Sipps for my grandchildren. And, until they are old enough to take an interest, am considering investing in a world tracker ETF for each of them.

Your approach seems a really good idea.

However, you should prepare yourself for the possibility that your children may not take an interest in investing however hard you try to educate them. Despite my best efforts, and the demonstrable life - changing effects of successful investing, my adult children have no interest at all. One, because they are so successful in their career and the other because they have no interest in a disciplined financial approach. Both have received the value of a house in gifts from Mrs H and me. The wealthy one has tolerated my setting up a share portfolio which I enjoy managing for them but has to be badgered into doing the minimum amount of admin to save four figures of tax on dividends. The other purchased a house but lives from hand to mouth and has been happy to pay eye-watering amounts of bank charges as a result of bad cash management.

In some ways this is a blessing as it is nice to have offspring who don’t care too much about material things and we enjoy a relaxed and close relationship.

But I am hoping to educate our grandchildren and persuade them that living below their means and investing for the future will give them financial freedom later in life.

Good luck with your children’s financial education!

Howard

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Re: Giving to Infants

#165531

Postby Bouleversee » September 10th, 2018, 5:22 pm

I am In the same boat as you, Howard. Both of mine leave it all to me (to be fair, they both have very demanding jobs and equally time consuming children) and I am getting fed up with it as I no longer have time or energy either. It is very difficult to keep things equal if you start at different times. I wonder if you found, as I did, that the one who earns the most also has the most successful portfolios and it is pure luck, no thanks to her. I really ought to do some adjustment to be fair, i.e. give the other one a bit more. I have been paying ISAs for them till recently but assumed they would be funding their own pensions. Alas, being self employed, they have only just started doing that, much too late in the day, and much of the cash remains uninvested. Their problem. Any spare cash I might have from now on is going to the grandchildren since I don't think their parents are doing anything much for them and things are going to be very hard for that generation.

ten0rman
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Re: Giving to Infants

#165622

Postby ten0rman » September 11th, 2018, 9:39 am

I've very recently been looking at our savings from an IHT point of view, and have decided to give our grandchildren sums of money at birthdays and Christmas, not very large sums I have to admit as I'm somewhat concerned about making it as easy as possible for our children on our deaths.

The problem is that we have two adult grandchildren who get the cash to do as they will - apparently they are indeed saving it; one 11 year old who has a Child Trust Fund - I keep nudging her mother to do something about it, but in the meantime the child gets the same as the adult grandchildren; and one 3 year old grandchild - her parents have set up a junior ISA for her, into which I pay the appropriate lump sums. And yes, I'm well aware that at 18 it all may well disappear!

As far as our children are concerned, we have one who has had a nasty accident and is now in a wheelchair, one who is indeed a good worker and doing very well indeed, and one who frankly I can't understand his attitude. Of these three, the wheelchair user is the one who will need the money, the good worker won't, and the third one doesn't really deserve anything, but, as has been said, morally it's wrong to differentiate so our wills simply show that all our assets are to be cashed in and divided equally between the three. In the interim, the wheelchair user does get small amounts of help as and when required, and I wouldn't be at all surprised to find that her siblings are aware of this.

But that's the best we can do without getting into all sorts of difficulties such as deprivation of assets, tax avoidance schemes etc.

ten0rman

TUK020
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Re: Giving to Infants

#165665

Postby TUK020 » September 11th, 2018, 1:25 pm

ten0rman wrote:As far as our children are concerned, we have one who has had a nasty accident and is now in a wheelchair, one who is indeed a good worker and doing very well indeed, and one who frankly I can't understand his attitude. Of these three, the wheelchair user is the one who will need the money, the good worker won't, and the third one doesn't really deserve anything, but, as has been said, morally it's wrong to differentiate so our wills simply show that all our assets are to be cashed in and divided equally between the three.

ten0rman


Interesting. I have a very different perspective of the ethics/morality of the situation.

My perspective is that your children have no automatic right to your money. They are independent adults, and can make their own way in the world.
If you choose to support one who has additional need, then why not? Be up front with the others about it, but at the end of the day it is your decision, not theirs.
If you do wish to support the others, then you can always do so in a manner that rewards their own behaviour - for example, offer matching funds into an ISA up to a certain amount per year, on the proviso that they do not touch any of it - the moment they withdraw a £, then all future contributions cease. They then get a pot to use as a one shot opportunity for house deposit etc, but there is no second bite.

I appreciate this is an unsolicited opinion on a fairly personal matter, and I hope you are not too offended by my sharing my views
tuk020

ten0rman
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Re: Giving to Infants

#165671

Postby ten0rman » September 11th, 2018, 2:15 pm

TUK020,

Not offended at all. Actually I agree that there is no automatic right to the parents assets, but I do think fairness comes into it, treat them all the same. When all said and done, had my daughter not gone horse riding, this problem would not have arisen, so why should the other two suffer because of their sister doing something which turned out to be dangerous.

Another example. Someone I know married a girl who was disliked by his mother, so much so that at one point, the mother threatened to cut the son out of her will. The father disagreed, and as a result, their assets were distributed evenly, so the son did not lose out. An example of fairness, even though there may have been reasons for being unfair.

ten0rman

melonfool
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Re: Giving to Infants

#165699

Postby melonfool » September 11th, 2018, 4:57 pm

TUK020 wrote:If you do wish to support the others, then you can always do so in a manner that rewards their own behaviour - for example, offer matching funds into an ISA up to a certain amount per year, on the proviso that they do not touch any of it - the moment they withdraw a £, then all future contributions cease. They then get a pot to use as a one shot opportunity for house deposit etc, but there is no second bite.



If my parents tried that, I'd tell them to stick their money where the sun doesn't shine - and, in fact, in the past have told them that they cannot buy me or control my behaviour with their money and this was part of the reason I didn't contact them for 12 years.

Luckily, they have seen the light and no longer try it on - they can be generous (they have enough money), and I agree no-one has the right to have their money, but if it's not 'without reservation' then I don't want it.

I think they try to be fair, but I agree with you all that it's a difficult decision. I don't have offspring but I treat my niece and nephew as if they were, so gifts go to them and I made the decision to treat them exactly the same and that all gifts are without reservation at all times. I don't even ask what they do with the money I give them. I know my niece is better with her money, and my nephew likes a drink and good food - who am I to judge?

Mel


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