Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Marrin Dooks
Speaker 1: Your Money, the personal finance edition of Marrin Dooks Money
Speaker 1: and these bonus podcasts we talk about the best strategies
Speaker 1: for making the most of your money. I'm Marrin Sumset
Speaker 1: Web and with me today senior reporter of Money Distilled
Speaker 1: author John Stebeg Hi John, Hi, mem We've been geting
Speaker 1: quite a lot of good questions recently, haven't we who knew?
Speaker 1: Who knew? Our listeners were so engaged and so interesting
Speaker 1: Lifetime isis? That was an interesting one last week and
Speaker 1: we got another very good one on junior iceers this week. Now,
Speaker 1: before we get started on this, I'm just going to
Speaker 1: say we are going to have a Marin Talks Money
Speaker 1: later in this series, probably in December. We're talking about
Speaker 1: clever waste is that money as I feel kids? But
Speaker 1: this week, in fact, we're going to do that just
Speaker 1: in time for Christmas, because you know grandparents'll be sending
Speaker 1: their twenty pound not jib want something to do with them.
Speaker 1: This week it's all about junior isis. We've had a
Speaker 1: question in from Adam.
Speaker 2: Hi John him, Marin, This is Adam here. My question
Speaker 2: is I'm about to become a dad, and I was
Speaker 2: hoping that you guys could talk about the various guiser
Speaker 2: options and specifically whether there are any good stocks and
Speaker 2: shares products on the market.
Speaker 1: Now, John, you and I we've talked about this before
Speaker 1: because we both always felt a little guilty that we
Speaker 1: didn't actually open jises for our children early doors, did we?
Speaker 1: Although we were lucky to a degree because we were
Speaker 1: both had our children at the time when you got
Speaker 1: child trust funds. Yes, so Gordon Brown bunged us both
Speaker 1: a little bit of money, which we left languishing in
Speaker 1: random accounts for eighteen years. And that was kind of that.
Speaker 3: Yeah, I hate him. My admin phobia really really got
Speaker 3: me on that one, particularly for child number two, who
Speaker 3: unfortunately saw most of it eroded and shocking fees after
Speaker 3: I lost track of where it was. But let's just
Speaker 3: move swiftly on from that colossal era.
Speaker 1: John, you were actually had ams? Are you an embarrassment
Speaker 1: to the podcast? I thought you were going to say
Speaker 1: that you'd got a grab at some point and blah
Speaker 1: blah blah. I did, I did. My kids actually didn't
Speaker 1: end up with junior isers, just just so you know.
Speaker 3: Yeah, Yeah, Like I said, I feel like a like
Speaker 3: a massive fielure for that one, which I am.
Speaker 1: Word you are and I'm well talk to you talking
Speaker 1: about that later. I hope we should get the kids
Speaker 1: on anyway. So junior iSER is a very very simple vehicle.
Speaker 1: It is a tax wrapper into which you can put
Speaker 1: nine pounds a year for each child. So over an
Speaker 1: eighteen year period, that's going to add up. Between the
Speaker 1: between birth and the age of sixteen, you both control
Speaker 1: and uh, well you control the money and they can't
Speaker 1: have it. Between sixteen and eighteen, they can control it.
Speaker 1: They can move it around the place, but they can't
Speaker 1: have it age eighteen you have to hand it over
Speaker 1: them and they can do whatever they want with it.
Speaker 1: You can put the money into cash, or you can
Speaker 1: put it into trucks and chares, just like an adult isp.
Speaker 1: You can I don't know what else can you do
Speaker 1: with it? John? What have I missed?
Speaker 3: I mean, honestly, that's that's it is in terms of
Speaker 3: what you can do. It's just an isser, but with
Speaker 3: with different rules in terms of withdrawals and needs limits
Speaker 3: and all.
Speaker 1: That is to yeah, what you really want, what you
Speaker 1: really want is to build a cash in that not
Speaker 1: cash but as its inside that and then have your
Speaker 1: child age eighteen look at it and go, thank you
Speaker 1: so much, mommy and daddy, you are amazing, and move
Speaker 1: it into an adult is, keep it there for ages,
Speaker 1: keep adding into it, and then use it for a
Speaker 1: hospitables it or something like that. If anyone has experienced
Speaker 1: that ideal situation, do let us know, because we don't
Speaker 1: come across it very often. Mostly people either don't save
Speaker 1: into it properly, leave it in cash so languages around
Speaker 1: the place and doesn't make any proper tons, or they
Speaker 1: handed over with their kids who go to a beefer
Speaker 1: and spend a lot on boot.
Speaker 3: I mean that's a good point about cash. So I
Speaker 3: think if you if you are going to put money
Speaker 3: in a juniorizer, then nine times at a turn it
Speaker 3: should be in stocks and sheers because they're not going
Speaker 3: to be access and for a long period of time,
Speaker 3: so it is daff to keep it in cash.
Speaker 1: It's also a bit pointless because apart from anything else
Speaker 1: you have, you have an allowance, you have an allowance
Speaker 1: for interest, and you have your general tax allowance. So
Speaker 1: you're going to have to learn an awful lot of
Speaker 1: interest before it's worth having it stuck inside. And I say,
Speaker 1: rather than just in a general deposit account, right.
Speaker 3: No, absolutely, so yeah, I mean there's almost no reason
Speaker 3: to have it in cash ever. And actually if they
Speaker 3: will actually this is going off topic, but if they're
Speaker 3: looking for a decent knowedge, then they would actually say,
Speaker 3: if you're going to open a gaza, you have to
Speaker 3: put it in stocks and shares. You have to invest it,
Speaker 3: and it can it can't be in cash.
Speaker 1: John Manny steaks topic.
Speaker 3: Like in the right direction for one to put it
Speaker 3: that way.
Speaker 1: Right, Listen, before we move on to talking about the
Speaker 1: stocks and shares ISA, which is your own gister, sorry,
Speaker 1: which is your only JASA you should probably have your kid,
Speaker 1: let's talk about whether you should have a jace open
Speaker 1: aer for your child at all. Now, one thing that
Speaker 1: we always say here is that your children will really
Speaker 1: thank you if you put your own financial security ahead
Speaker 1: of theirs the other way around. One thing they're really
Speaker 1: gonna hate you for is if just when they're hitting
Speaker 1: their own middle age and they've got children and education,
Speaker 1: mortgages and all the stuff to worry about, it turns
Speaker 1: out that you haven't take taken care of your own
Speaker 1: retirement and they have to help you out. Nobody wants that.
Speaker 1: So the absolute key thing here is do not start
Speaker 1: looking up children for your children, and sorry, looking up
Speaker 1: children for your children. Don't look up any children. Never
Speaker 1: look up children. I have a cold, I don't. I'm
Speaker 1: going to start again. Before you lock up any money
Speaker 1: for your children, look after your own financial security. Put
Speaker 1: on your own oxygen mask first. This is the key.
Speaker 1: So if you haven't done that, I still think that
Speaker 1: it's worth opening a wrapper so that grandparents, godparents except
Speaker 1: it can contribute into that rapp up. But I don't
Speaker 1: think you should be putting your own money into that
Speaker 1: wrap up until you have filled up your own is set,
Speaker 1: your own set. Except is that Vegian? Or am I
Speaker 1: just being made on the kids?
Speaker 3: No, you're sor you're one hundred percent right? I yeah,
Speaker 3: I mean I sort of think that ISA is a
Speaker 3: good vehicle for grandparents and other people who you know
Speaker 3: are willing and able to kind of give your kids
Speaker 3: money for the future, and you know, and the whole
Speaker 3: thing about they get it eighteen. Well, okay, that's that's
Speaker 3: a riscue take. But no, I think that you know
Speaker 3: if you if you aren't filling up, you know, twenty
Speaker 3: grand or forty grand between the two of you and
Speaker 3: your own ISA each year, which is a there's not
Speaker 3: you know, not many people can do that. Then there
Speaker 3: isn't really any point on you know, hiding this money
Speaker 3: which cannot be withdrawing for until your kids at eighteen.
Speaker 3: You're absolutely right sort yourself out first, to.
Speaker 1: Yourself at first. Right, So here I am sorted myself out.
Speaker 1: You know, I'm Richard Crisis ice fill every year pension
Speaker 1: Al sorted. My muggage is paid off, it's out on
Speaker 1: the on the way to being paid off. It's all brilliant.
Speaker 1: I'm going to open a gay set for my kit.
Speaker 1: We've already discussed how you shouldn't bother with the cash.
Speaker 1: Icep really not worth it. So we're going to have
Speaker 1: a stocks and shoes. I said, how am I going
Speaker 1: to do that?
Speaker 3: I mean, that's a good question. But I think, well,
Speaker 3: you know, a reader sort of saying or what what
Speaker 3: good ones are there out there? And obviously that's you know,
Speaker 3: we can't sit here and say well this found or
Speaker 3: that fund. But the way I don't know what about
Speaker 3: you men, but the way I would think about it
Speaker 3: is this is an investment that has a very long
Speaker 3: time horizon on it. So whatever is the maximum amount
Speaker 3: of risk that you are willing to take, you should
Speaker 3: be thinking about it in those terms, so you know,
Speaker 3: all equities rather than sitting there worrying about whether they
Speaker 3: stick some in boinds or whatever. And then beyond that,
Speaker 3: it really depends on what your appetite is for how
Speaker 3: much effort you want to go to. You can just
Speaker 3: go for the straightforward, passive stuff and kind of march
Speaker 3: the global index as much as you, you know, and
Speaker 3: that's as far as you want to take it. And
Speaker 3: if you're going to be more active, then yeah, I mean,
Speaker 3: you know, what we always see is just kind of
Speaker 3: go for the stuff that's undervalued, because over time, buying
Speaker 3: cheap is better than buying expense.
Speaker 1: Of John, I do just want to go back one bit,
Speaker 1: just from the phrasing of the question. I want to
Speaker 1: be absolutely certain that everybody listening understands that there is
Speaker 1: not really any such thing is a good stocks and
Speaker 1: shares er, if you see what I mean, and that
Speaker 1: I don't want people to think that a stocks and
Speaker 1: shares iSER or a giice is a thing in itself,
Speaker 1: it's not a thing. It's a rapper, that's all it is.
Speaker 1: So whoever you go to as your provider, what you're
Speaker 1: buying from them is you're buying a rapper, the equivalent
Speaker 1: of a box into which you will put investment products.
Speaker 1: So what you're doing is choosing a box, and then
Speaker 1: you're choosing products to put inside the box. And if
Speaker 1: you go particular providers like I don't know, Nutmeg or
Speaker 1: Wealthifier or something like that, they will choose the product
Speaker 1: to put in the box for you. If you go
Speaker 1: to Save Vanguard, you buy a very cheap box, but
Speaker 1: you can only put Vanguard stuff in the box. You
Speaker 1: go to somewhere like an Interactive Investor or Aja Bell
Speaker 1: or how group of hands down, there're three big names
Speaker 1: in this market. You go to them, you buy a box.
Speaker 1: It's maybe not quite as cheap as the box you
Speaker 1: buy boxes you but somewhere else, but you get a
Speaker 1: much wider variety of stuff to put inside it. So
Speaker 1: that's the absolute key thing. You are not buying a thing,
Speaker 1: You are buying a box a rapper. I just want
Speaker 1: to be clear on that because I'm not sure that
Speaker 1: everybody always understands that you know they say, I've got
Speaker 1: a Barkley's eye saring name. Well, that's not really a thing,
Speaker 1: it's just a rapper.
Speaker 3: No, you're right, So that's a really key point. And
Speaker 3: then yeah, what you put into it is up to you.
Speaker 1: Yeah, But then I would also say, the only thing
Speaker 1: you will know in advance about the performance of this
Speaker 1: of the products you put inside the wrapper will be
Speaker 1: how much they cost. And costs really compound over an
Speaker 1: eighteen year period. It's going to make a very big
Speaker 1: difference to how much money your kid has at the end.
Speaker 1: Whether you chose something that a total costs a year
Speaker 1: of twenty five basis points or a zero point two
Speaker 1: five percent or one percent or one and a half percent,
Speaker 1: there's going to be a huge bit of difference there,
Speaker 1: and you will know that in advance, whereas in advance
Speaker 1: you cannot know whether the footsie is going to outperform
Speaker 1: the S and P five hundred, or whether you should
Speaker 1: be in China or whether you should be in Japan
Speaker 1: or whatever. We have our views, but there's no guarantees here.
Speaker 1: What is a guarantee is that your costs will compound.
Speaker 3: That's it, yep, So keep it cheap.
Speaker 1: Whatever you do, keep it cheap, keep it simple, and
Speaker 1: don't forget that it could easily end up in a
Speaker 1: barn a Beefer. Thanks for listening to this week's Mary
Speaker 1: Dogs Money. If you like us show, rate, review you,
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Speaker 1: at marinas w and John is John Underscore Stepic. This
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