I have been interested in the stock market since my dad bought some shares in Rolls Royce on my behalf when I was 12. I’ve never had much money to invest in the stock market, but I have enjoyed dabbling every so often. I also read a lot about stock markets in this link but in recent years, with children and little disposable income, I have done so less and only providing I’ve paid into the childrens’ CTFs and Junior ISAs and I’m not using housekeeping money!

As a stay-at-home-mum, who previously worked for a financial company in the City, the idea of dipping my toe into investing again is an exciting one. Although only seven or eight at the time, I remember the whole British Gas ‘Tell Sid’ IPO, and the Royal Mail IPO was reminiscent of those times. I wanted to be involved.

I applied for a smallish amount of shares in the Royal Mail IPO: more than the minimum investment of £750, but a heck of a lot less than £10,000.

The Royal Mail IPO and private investors

I found out this morning that I, and every other small investor that had applied for less than £10,000-worth, had received just £750 of stock (only 93,000 out of 730,000 small investors had actually wanted to buy just £750). Those wanting to buy more than £10,000 got the news today that they had been allocated a grand total of zero shares. This is amazingly disappointing for anyone who had a nest egg they wanted to invest.

Yet again, the private investor is maltreated and given a paltry tranche whilst the greedy institutions are able to get their mitts on the lion’s share. I’m really cross.

To add insult to injury, the money for the full amount I wanted to invest has been taken out of my account and, like 635,000+ others, I might not get this refunded until October 21. I won’t get a penny in interest. What a nice little earner for the Government!

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Savings Accounts

If you don’t want to lock money away for a long period and are simply looking for a place to put birthday money, Christmas money and the occasional spare fiver, whilst getting some interest, then a simple children’s savings account is the way to go. You open the account in your child’s name but manage it yourself until they’re old enough to do it themselves. Children’s accounts usually pay higher rates of interest; a quick look on a comparison website is the best starting point. You’ll be able to see who gives the highest rate of interest and if there are any conditions attached such as saving a minimum amount each month, not having instant access or tying up the money for a fixed term of say a year. Check the features of the account carefully and then rate according to your needs.

Child Trust Fund

You may have heard of Child Trust Funds (CTFs). These were long-term, tax-free savings accounts for which the Government gave you a £250 voucher. I set up one for my eldest daughter. Sadly, the £250 contribution from the Government was completely stopped from January 1st 2011, and you can no longer set up a new CTF. Essentially, they were replaced with Junior ISAs.

Junior ISAs

Unlike a child’s savings account, you can’t dip into a Junior ISA (even if you do see an adorable little snowsuit in the sale). This money is locked in until your child turns 18. When they do hit this age the money is theirs not yours! Therefore think carefully before setting one up.

If you’re happy with the idea of not being able to get your hands on the cash, the next decision to make is what type of Junior ISA. You can have a cash one, a stocks and shares one (often referred to as an investment ISA) or both. The Junior ISA limit is £9,000 for the tax year 2023/24 (whether you have one or both types).

A cash Junior ISA pays tax-free interest on the money you save. It doesn’t have the potential for significant gains like the stocks and shares ISA. However, you won’t lose any money if the stocks you’re invested in take a tumble. With a stocks and shares Junior ISA your money is invested and you won’t pay tax on any capital growth or dividends you receive.

I set up investment ones for my twins with OneFamily (formerly Family Investments). I’m not too worried about the ups and downs of the stock market. This is a long-term investment and I fully expect that in the next 17 years the stock market will pay some very good returns.

There are many providers of both types of ISA. Comparison websites give a good snapshot and the GOV.UK website (https://www.gov.uk/junior-individual-savings-accounts) has a really useful section, which covers all the key facts.

A final note: I am not a financial expert, I am talking about my own experiences, so as with anything DYOR!

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