Viewing 11 posts - 1 through 11 (of 11 total)
  • Junior SIPP, anyone opened one…what funds?
  • rockhopper70
    Full Member

    Rock Jnr is 14 and we have a bit of money accumulated over time, getting .000002% interest.

    I’m looking at a Junior SIPP, so mega long term, benefiting from tax advantages and long term investments. Fund choice is a tricky one, cautious growth over the long term or something volatile, smoothing out (hopefully) those peaks and troughs over 40years. 50/50 might be the best solution, but anyone had a luck or punted on a single fund for the long term?

    flicker
    Free Member

    At his age I’d be looking for a high risk global growth fund with low fees to start him off.

    boombang
    Free Member

    Are you using the J-SIPP to make sure money gets locked away or for tax efficiency?

    I don’t use my own ISA allowance, so instead invest money for my son in that on the basis if it is needed I can get it.

    If you have unused annual pension allowance and don’t plan on taking the full 25% of your own SIPP/pension there is the option of putting in your own SIPP, releasing at 57 free of tax then putting into an ISA or equivalent then for him. That of course will constitute a gift at that time, so if you aren’t looking like making it to 64 then better to not take it and let SIPP pass down to beneficiaries outside of estate and free of income tax.

    Personally I can’t see the point of a J-SIPP unless you MUST lock it away.

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    andywill
    Full Member

    I agree with flicker, but perhaps into several low cost funds/trusts. Growth for such a long term investment, I would have thought, would be a sensible investment style.

    rockhopper70
    Full Member

    I’m thinking it’s a lump sum then forget and he can’t get to it until his 55’s or so. Only a modest amount, probably £1,000/£1,500, but hopefully a nice lump to have in 40years that is in his name, hasn’t been able to withdraw, and neither have I been tempted by money in my name, on his behalf!!

    slackboy
    Full Member

    Didn’t know this:

    Anyone can put money into a Junior SIPP as long as it is within the £3,600 annual contribution limit, which includes tax relief. In short, you can put up to £2,880 a year into the Junior SIPP, and the Government will add tax relief at 20% to make this up to £3,600.

    you’ll get a free £720 by investing the max in a junior SIPP. Not to be sniffed at but, l<span style=”font-size: 0.8rem;”>ike others, I’d be looking at a stocks and shares ISA rather than tying things up inside a pension wrapper. I wouldn’t be wanting to tie money up for 40 years +.</span>

    boombang
    Free Member

    Makes sense on that basis then, nice thought too.

    Roughly assume in 45 years £1500 on a 4% net =/-2% would be between £3.6k (approx doubling net of inflation) and £20.6k (lots more than inflation)

    Not a Vanguard fanboy but I do like the simplicity of pricing and their target retirement and lifestrategy ranges. That said my most consistent performers have been a Pacific ex-Japan Stock Index Fund and an Emerging Markets Stock Index Fund.

    I’ve one fund that has outperformed all others, which is a Fidelity Institutional Emerging Markets Fund, not sure if that is available in your wrapper?

    Didn’t know this:

    Anyone can put money into a Junior SIPP as long as it is within the £3,600 annual contribution limit, which includes tax relief. In short, you can put up to £2,880 a year into the Junior SIPP, and the Government will add tax relief at 20% to make this up to £3,600.

    you’ll get a free £720 by investing the max in a junior SIPP. Not to be sniffed at but, l<span style=”font-size: 0.8rem;”>ike others, I’d be looking at a stocks and shares ISA rather than tying things up inside a pension wrapper. I wouldn’t be wanting to tie money up for 40 years +.</span>

    That is why for my 5 year old I’ve put some into my ISA (again doesn’t restrict like a JISA) and some into my own pension (tax saving, may be able to release lump sum at 57 unless changes again).

    Only one person I know gets ‘benefit’ from a J-SIPP, that’s primarily down to it offsetting earnings and tax – he was well into 6 figures so on top of 40% tax his tax free allowance was also reduced (effective 60% on that portion directly over £100k).

    andrewh
    Free Member

    What about one of those help to buy ISA thingys? He’s going to be wanting a house in ten years or so that might be worth thinking about?

    5lab
    Full Member

    Only one person I know gets ‘benefit’ from a J-SIPP, that’s primarily down to it offsetting earnings and tax – he was well into 6 figures so on top of 40% tax his tax free allowance was also reduced (effective 60% on that portion directly over £100k).

    from what I can find, it doesn’t actually help that scenario much – you’re only getting 20% tax releif on a jsipp which is likely to get taxed at 20% when your kid withdraws it – but importantly it’s still getting hit with the full 60% tax up front anyway – there isn’t 60% relief unlike your own pension

    boombang
    Free Member

    I believe you can claim back the additional 20% via a tax return, but yes get your point.

    I think in his situation he was paying over £40k per year into his pension anyhow, but somehow (I can’t explain why) the j-sipp contributions were worthwhile.

    AdamT
    Full Member

    Could you pop it in your own ISA then dribble it into a LISA web they’re 18? If I understand it, you can get a 25% govt bonus on up to £4k pa contributions. It might be more useful for a house purchase Vs waiting until retirement. I might have got this wrong though, but might be worth researching? IANAFA

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