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Pipers

Son wants to start investing

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My son who is 15 has again asked me can he start investing/ trading. For tax purposes i am thinking of starting a sipp for him with either L&G, Aviva or Virgin money  or maybe set one up with Hargreaves and Lansdown  so he can choose stocks himself.  The main idea is he will put his pocket money (some of it) plus i will top up every month or so at least once every 3 months.  Plus he will not be able to withdraw the money until he is 55 or when the government states he can, meaning he will be able to invest year after year.  Or do you guys think a junior ISA   

What do you guys think?       

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I've had pretty good experience with a Hargreaves Lansdown stocks and shares ISA. Key thing is the cost of trades (really adds up unless you're trading thousands of pounds at a time). If he's not trying to do the all-day trading and happy for things to go through on a set day every month then it might suit them well.

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You could try Vanguard or Wealthsimple. Vanguard has Junior ISA and, if I'm not mistaken, you can get a custodial account with Wealthsimple. Pretty easy to invest without too much intervention. So far I had best results with the second one, as I'm no finance buff, both are convenient for me. The fees are some of the lowest you'll get in this market. 

In both cases there's a risk of losing capital and what I've wrote is purely based on my own experience and not solid financial advice. 

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Thanks guys, it's the fees if he started buying shares at a cost of £10 a transaction it will become expensive though the education maybe worth it for him.  I learnt by losing and panic selling. 

I will have a look around for the best brokers for him. 

 

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Im thinking he doesnt need to save, or understands what it is to save, so a cash ISA is probably waste of time for pocket money.  He wants to learn about investing, so crack on with that path.  Perhaps find one that does paper/test trading, have a couple of real stocks but regular involvement with the paper trading account. 

Edited by Martlet

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Key thing is learning investments rather than trading. Investments mean you believe in the fundamentals underlying a stock/share so are happy to hold onto it for several years potentially. HL has an option for monthly savings where you pick what your money goes into each month and the cost for buying shares that way is tiny compared with the normal trading fees.

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Definitely HL SIPP because of the generous tax additions added to the SIPP.
Put in £2880 over the tax year and the government will make this up to £3,600.
Repeat every tax year - where else can you get such an immediate gain ?
Once your son starts paying tax he can increase the investment beyond the £3,600 gross if he chooses.
Ok the money cannot be taken out until 55 + so if that's a concern do an ISA as well but you will miss out the 25% near instant benefit provided in the SIPP.

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31 minutes ago, Pete said:

Definitely HL SIPP because of the generous tax additions added to the SIPP.
Put in £2880 over the tax year and the government will make this up to £3,600.
Repeat every tax year - where else can you get such an immediate gain ?
Once your son starts paying tax he can increase the investment beyond the £3,600 gross if he chooses.
Ok the money cannot be taken out until 55 + so if that's a concern do an ISA as well but you will miss out the 25% near instant benefit provided in the SIPP.

That wouldnt apply for a non-tax payer though would it?

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2 hours ago, Martlet said:

That wouldnt apply for a non-tax payer though would it?

Yes that's the beauty of this and I do it every year for my wife who isn't a tax payer.

Each tax year - you can do this now for 2018/19 and after April 5th repeat for 2019/20 so don't loose out this tax year with only a few days remaining.
You can start one of these for a child on the day they are born and as they are non tax payers you are effectively gaining up to £720 per year as a gift from the government.
There is no catch only that the money is locked into a SIPP until age 55 ( at the moment anyhow ).

For each pound you put into your SIPP the government adds 25 % to a maximum from you of £2,880.
If you put £2,880 into the SIPP it will be increased to £3,600 automatically.
It takes a couple of months depending on timing as there are set periods.
That's a gift of £720 for NOTHING.

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On 29/03/2019 at 11:46, Pipers said:

My son who is 15 has again asked me can he start investing/ trading. For tax purposes i am thinking of starting a sipp for him with either L&G, Aviva or Virgin money  or maybe set one up with Hargreaves and Lansdown  so he can choose stocks himself.  The main idea is he will put his pocket money (some of it) plus i will top up every month or so at least once every 3 months.  Plus he will not be able to withdraw the money until he is 55 or when the government states he can, meaning he will be able to invest year after year.  Or do you guys think a junior ISA   

What do you guys think?       

All my kids are on a junior isa with vanguard. Just remember to watch out for the fortune tellers 🔮 on this forum that are wrong more times than a broken clock.

 

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which wrapper to choose is a secondary question, more important imo is to ground them with a solid investment philosophy.  When I first started out I made just about every mistake under the sun because I didn't yet have a well-defined philosophy that had been forged from experience in the markets and the pain of loss.

 

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Maybe your son should think about diversification of the money if he does not have much experience? Property crowdfunding may be the solution because you can enter the investment with small amount of capital and still receive the returns from several projects.  

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On 31/03/2019 at 00:31, HelpingHands said:

The best thing about it is the volatility.  

Low fees, large swings to trade and fewer professionals to compete with in the market.

Plus the hype has totally gone.  Every one hates it or has forgotten about it.   

Again, key thing is are they looking at learning trading or looking at learning investing. Their choice of platform and what they put their money into will vary a lot depending on that distinction.

23 hours ago, vand said:

which wrapper to choose is a secondary question, more important imo is to ground them with a solid investment philosophy.  When I first started out I made just about every mistake under the sun because I didn't yet have a well-defined philosophy that had been forged from experience in the markets and the pain of loss.

 

I'm mildly inclined to disagree. Life experience is a great teacher and experienced lessons can be much more powerful than taught ones no matter how true the wisdom or how knowledgable the teacher. Also, if they are anything like me when I was a teenager I can think of nothing that will push me away from sensible investments wuicker than a parent telling me what approach I should take 😆

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I wound recommend mutual funds. Can still be a lot of fun researching and picking where in the world you want to invest and in what sectors. Plus no trading fees on lots of brokers sites, so you can just stick the odd £50 in if you want. Should grow well over 20 years if he keeps dripping money in. Wish I'd started at 15!

 

Then maybe invest in one or two individual stocks if he wants to learn about stock picking. But they are a lot more stressful to hold and much bigger risk of losing lots of money. Could put him off investing altogether if he picks a rotter. 

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