Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Marrin Dooks Your Money, the personal finance edition of Marrin Dooks Money and these bonus podcasts we talk about the best strategies for making the most of your money. I'm Marrin Sumset Web and with me today senior reporter of Money Distilled author John Stebeg Hi John, Hi, mem We've been geting quite a lot of good questions recently, haven't we who knew? Who knew? Our listeners were so engaged and so interesting
Lifetime isis? That was an interesting one last week and we got another very good one on junior iceers this week. Now, before we get started on this, I'm just going to say we are going to have a Marin Talks Money later in this series, probably in December. We're talking about clever waste is that money as I feel kids? But this week, in fact, we're going to do that just in time for Christmas, because you know grandparents'll be sending their twenty pound not jib want something to do with them.
This week it's all about junior isis. We've had a question in from Adam.
Hi John him, Marin, This is Adam here. My question is I'm about to become a dad, and I was hoping that you guys could talk about the various guiser options and specifically whether there are any good stocks and shares products on the market.
Now, John, you and I we've talked about this before because we both always felt a little guilty that we didn't actually open jises for our children early doors, did we? Although we were lucky to a degree because we were both had our children at the time when you got child trust funds. Yes, so Gordon Brown bunged us both a little bit of money, which we left languishing in random accounts for eighteen years. And that was kind of that.
Yeah, I hate him. My admin phobia really really got me on that one, particularly for child number two, who unfortunately saw most of it eroded and shocking fees after I lost track of where it was. But let's just move swiftly on from that colossal era.
John, you were actually had ams? Are you an embarrassment to the podcast? I thought you were going to say that you'd got a grab at some point and blah blah blah. I did, I did. My kids actually didn't end up with junior isers, just just so you know.
Yeah, Yeah, Like I said, I feel like a like a massive fielure for that one, which I am.
Word you are and I'm well talk to you talking about that later. I hope we should get the kids on anyway. So junior iSER is a very very simple vehicle. It is a tax wrapper into which you can put nine pounds a year for each child. So over an eighteen year period, that's going to add up. Between the between birth and the age of sixteen, you both control and uh, well you control the money and they can't have it. Between sixteen and eighteen, they can control it.
They can move it around the place, but they can't have it age eighteen you have to hand it over them and they can do whatever they want with it. You can put the money into cash, or you can put it into trucks and chares, just like an adult isp. You can I don't know what else can you do with it? John? What have I missed?
I mean, honestly, that's that's it is in terms of what you can do. It's just an isser, but with with different rules in terms of withdrawals and needs limits and all.
That is to yeah, what you really want, what you really want is to build a cash in that not cash but as its inside that and then have your child age eighteen look at it and go, thank you so much, mommy and daddy, you are amazing, and move it into an adult is, keep it there for ages, keep adding into it, and then use it for a hospitables it or something like that. If anyone has experienced that ideal situation, do let us know, because we don't
come across it very often. Mostly people either don't save into it properly, leave it in cash so languages around the place and doesn't make any proper tons, or they handed over with their kids who go to a beefer and spend a lot on boot.
I mean that's a good point about cash. So I think if you if you are going to put money in a juniorizer, then nine times at a turn it should be in stocks and sheers because they're not going to be access and for a long period of time, so it is daff to keep it in cash.
It's also a bit pointless because apart from anything else you have, you have an allowance, you have an allowance for interest, and you have your general tax allowance. So you're going to have to learn an awful lot of interest before it's worth having it stuck inside. And I say, rather than just in a general deposit account, right.
No, absolutely, so yeah, I mean there's almost no reason to have it in cash ever. And actually if they will actually this is going off topic, but if they're looking for a decent knowedge, then they would actually say, if you're going to open a gaza, you have to put it in stocks and shares. You have to invest it, and it can it can't be in cash.
John Manny steaks topic.
Like in the right direction for one to put it that way.
Right, Listen, before we move on to talking about the stocks and shares ISA, which is your own gister, sorry, which is your only JASA you should probably have your kid, let's talk about whether you should have a jace open aer for your child at all. Now, one thing that we always say here is that your children will really thank you if you put your own financial security ahead
of theirs the other way around. One thing they're really gonna hate you for is if just when they're hitting their own middle age and they've got children and education, mortgages and all the stuff to worry about, it turns out that you haven't take taken care of your own retirement and they have to help you out. Nobody wants that. So the absolute key thing here is do not start looking up children for your children, and sorry, looking up
children for your children. Don't look up any children. Never look up children. I have a cold, I don't. I'm going to start again. Before you lock up any money for your children, look after your own financial security. Put on your own oxygen mask first. This is the key. So if you haven't done that, I still think that it's worth opening a wrapper so that grandparents, godparents except
it can contribute into that rapp up. But I don't think you should be putting your own money into that wrap up until you have filled up your own is set, your own set. Except is that Vegian? Or am I just being made on the kids?
No, you're sor you're one hundred percent right? I yeah, I mean I sort of think that ISA is a good vehicle for grandparents and other people who you know are willing and able to kind of give your kids money for the future, and you know, and the whole thing about they get it eighteen. Well, okay, that's that's a riscue take. But no, I think that you know if you if you aren't filling up, you know, twenty grand or forty grand between the two of you and your own ISA each year, which is a there's not
you know, not many people can do that. Then there isn't really any point on you know, hiding this money which cannot be withdrawing for until your kids at eighteen. You're absolutely right sort yourself out first, to.
Yourself at first. Right, So here I am sorted myself out. You know, I'm Richard Crisis ice fill every year pension Al sorted. My muggage is paid off, it's out on the on the way to being paid off. It's all brilliant. I'm going to open a gay set for my kit. We've already discussed how you shouldn't bother with the cash. Icep really not worth it. So we're going to have a stocks and shoes. I said, how am I going to do that?
I mean, that's a good question. But I think, well, you know, a reader sort of saying or what what good ones are there out there? And obviously that's you know, we can't sit here and say well this found or that fund. But the way I don't know what about you men, but the way I would think about it is this is an investment that has a very long
time horizon on it. So whatever is the maximum amount of risk that you are willing to take, you should be thinking about it in those terms, so you know, all equities rather than sitting there worrying about whether they stick some in boinds or whatever. And then beyond that, it really depends on what your appetite is for how much effort you want to go to. You can just go for the straightforward, passive stuff and kind of march the global index as much as you, you know, and
that's as far as you want to take it. And if you're going to be more active, then yeah, I mean, you know, what we always see is just kind of go for the stuff that's undervalued, because over time, buying cheap is better than buying expense.
Of John, I do just want to go back one bit, just from the phrasing of the question. I want to be absolutely certain that everybody listening understands that there is not really any such thing is a good stocks and shares er, if you see what I mean, and that I don't want people to think that a stocks and shares iSER or a giice is a thing in itself, it's not a thing. It's a rapper, that's all it is.
So whoever you go to as your provider, what you're buying from them is you're buying a rapper, the equivalent of a box into which you will put investment products. So what you're doing is choosing a box, and then you're choosing products to put inside the box. And if you go particular providers like I don't know, Nutmeg or Wealthifier or something like that, they will choose the product to put in the box for you. If you go to Save Vanguard, you buy a very cheap box, but
you can only put Vanguard stuff in the box. You go to somewhere like an Interactive Investor or Aja Bell or how group of hands down, there're three big names in this market. You go to them, you buy a box. It's maybe not quite as cheap as the box you buy boxes you but somewhere else, but you get a much wider variety of stuff to put inside it. So that's the absolute key thing. You are not buying a thing,
You are buying a box a rapper. I just want to be clear on that because I'm not sure that everybody always understands that you know they say, I've got a Barkley's eye saring name. Well, that's not really a thing, it's just a rapper.
No, you're right, So that's a really key point. And then yeah, what you put into it is up to you.
Yeah, But then I would also say, the only thing you will know in advance about the performance of this of the products you put inside the wrapper will be how much they cost. And costs really compound over an eighteen year period. It's going to make a very big difference to how much money your kid has at the end.
Whether you chose something that a total costs a year of twenty five basis points or a zero point two five percent or one percent or one and a half percent, there's going to be a huge bit of difference there, and you will know that in advance, whereas in advance you cannot know whether the footsie is going to outperform the S and P five hundred, or whether you should be in China or whether you should be in Japan or whatever. We have our views, but there's no guarantees here.
What is a guarantee is that your costs will compound.
That's it, yep, So keep it cheap.
Whatever you do, keep it cheap, keep it simple, and don't forget that it could easily end up in a barn a Beefer. Thanks for listening to this week's Mary Dogs Money. If you like us show, rate, review you, and subscribe wherever you listen to podcasts. Also, be sure to follow me and John on X or Twitter. I'm at marinas w and John is John Underscore Stepic. This episode was produced by SOMEERSADI Production Suport and sound designed by Moses and Questions and comments on this show and
all our shows are always welcome. Our show email is Merinmoney at Bloomberg dot net