Should you invest or save for your children? Best funds, best buys, kids pensions and more

This episode is your complete guide to saving and investing for children. Martin Lewis is joined by an investment specialist to answer everything you've ever wanted to know about putting money aside for under-18s, including whether it's better to save or invest (spoiler: for many children with a long-term horizon, investing may win out), how Junior ISAs and Child Trust Funds work, the best buys currently available, and the key things parents, grandparents and family members need to know before putting money away. They'll also explore investment fund options, whether Premium Bonds are a good choice for children, and even the often-overlooked world of children's pensions. Plus, in this week's Tell Us, Martin hears your stories of the times carefully checking a bill, invoice or statement saved you money. From spotting simple errors to uncovering major overcharges, including one listener who used AI to identify a £1,000 rental discrepancy. Then, Mastermind tackles a question many shoppers have wondered about: what are your legal rights if you buy something and the retailer reduces the price the very next day? Martin explains the rules, the myths, and when you may be able to get money back. And make sure you listen right to the end, as Martin reveals a special tip on an easy way for 13 to 17-year-olds to bag a free £50. If you want to ask Martin a question, you now can! His Question Time podcast lets you ask Martin absolutely anything and everything (within reason!). So, if you’ve always wanted to know how many hours a day he spends on his phone, what his go-to karaoke song is, or you have a very complicated question about your finances, email it to [email protected] mailto:[email protected].

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:46Martin Lewis?

  If you're asking me about saving, have you thought about investing? We're going to talk you through exactly how you do that and the practicals of that.

• 1:51Speaker 03

  You've made the rules. It'll be a big ah ah for me and a big hallelujah for you.

• 1:56Martin Lewis?

  No, it's what I do. It's what many people who work in the industry do. If the world economy is growing, then your ETF should grow.

• 2:03Speaker 03

  It's Martin's world. We all live in it.

• 2:06Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. Do you know what that's going to be about? I don't really know. And this is our big topic episode, where each week we lead on one main subject to help you save. Usually, most of it comes from my BBC Radio 5 live show with Adrian Charles. But there's also bonus money-saving tips and tricks for you, lucky, lucky podcast listeners. In today's episode, everything you've ever wanted to know about putting money away for under 18s. Is it best to save or to invest? Spoiler, most people should be considering investing. How do junior ISAs and child trust funds actually work? What are the best buys for both of them? What are the best funds to invest in? Are premium bonds still good for children?

• 2:50Martin Lewis?

  And we'll even go into the little talked about but really important children's pensions. And joined by an investment specialist to go through it all, and we're going to cover every single bit of it. Then this week's tellers, when did checking a bill or invoice properly save you money? What did you spot and how did you save? We'll hear from somebody who used AI to cut £1,000 off a wrong rental bill. The mastermind this week is a fascinating question. What are your legal rights if you buy something and the shop puts it on sale the next day? And finally, if you listen to the end, there's a special tip for an easy way for 13 to 17-year-olds to make a free £50. Play the theme tune.

• 3:51Speaker 03

  So is there anything you generally want to say about investing for children, saving for children?

• 3:56Martin Lewis?

  The big topic, the big point I want to make today is especially with a junior ISA. Far too many people go for the cash option. So I mean, let's just talk about why. I'll come into what a junior ISA is, but the basics, it's a tax-free savings account for children. We'll go into a little bit more details later. But the most important thing to understand is a junior ISA is a product where you lock money away until the child is 18. Most people put money in when the child is young, 1, 2, 3, 4, 5, 6, 7. So the two sweet spot rules for when it is right to invest money over save money is, number one, it should be money that you do not need to use for right now. Well, if you are putting it in a junior ISA by definition, unless they're nearly 18,

• 4:40Martin Lewis?

  you do not need to use it for right now. So bing, that one is ticked. Number two, it's money you're putting away for the long term, so over five years. Well, if you're putting money in when the child is five and they can't get the money out till they're 18, bing, so you fall into those two ticks. And yet, the huge demand is where's the best place to save in a junior ISA? Grandparents ask it, parents ask it, and we are too risk averse on this. Now, I'm not suggesting you put your kid's money in a single share. That's highly risky. I'm saying that if you look on a broad spread of investments, you know, we've got an investment advisor on later, but let's say a global tracker fund, something that invests in 1,000 different, big, worldwide companies,

• 5:25Martin Lewis?

  that where you get a sort of a graduated average, weighted average of their returns, then on the huge balance of probabilities, over a long period, that will smack the pants off savings unless you're very unlucky. And most people, if you're looking to build a nest egg for your children and you're putting money away for a long time, which is what a junior ISA is, I'll also be talking about children's savings, where you're not locking money away, and we'll be talking about pensions and other things, then you should be considering investing it. And I think we make a mistake in this country by not doing so. So if you're asking me my sort of big theme throughout this, I will of course answer people's questions on best places to save. I will do all of that. But my big push at the start is,

• 6:09Martin Lewis?

  if you're asking me about saving, have you thought about investing? And I want to also, we're going to talk you through exactly how you do that and the practicals of that.

• 6:15Speaker 03

  Okay. Question from Linda to start. If I started an ISA for my children a few years ago, the interest rate is terrible. Am I able to switch it? If so, how? And going forward, is an ISA still the best way to save for my children? I'll do my best to open them a savings account as they appear to have higher interest rates. One is 13, one is 15. I'd like this cash to be when they turn 21, and the cash already in an ISA to be transferred to another account for when they are 18.

• 6:42Martin Lewis?

  Okay, so let's just be plain. Once they're 18, it's not your decision, it's their decision. I mean, arguably, once they're 16, they can control their junior ISAs anyway. So the fact you want to keep it till 21, if it's in a junior ISA, that's what you chose to do with it, and therefore the money is theirs, and at the age of 18, they can do what they like with it. Hopefully, you'll have the conversation with your children and you can talk through what they do with it so they can keep it for longer. The decision between junior ISA and savings, if you're going to go for the cash, is an interesting one. So let's use this first as an opportunity to talk about what a junior ISA is. It is a tax account wrapper, which an under 18 can have. £9,000 per tax year, so 6th of April to the 5th of April each year, can be put in.

• 7:25Martin Lewis?

  Once it's in, it stays tax-free year after year. So if you are lucky enough to be able to max it, you know, by the time your kid's 18, you could have hundreds of thousands of pounds in here, both with the amount that you've put in, and if you invested it, the investment growth, if you saved it with the interest that's put on top. But it cannot be touched until they're 18, barring, and let's please God this doesn't happen to you, terminal illness or death. So here's the three rules I would say on junior ISAs. Do not use a junior ISA for money your kids will need while they are still kids. If you're going to want them to be able to spend this money, you want them to have access to this money, you do not do a junior ISA.

• 8:04Speaker 03

  Before 18.

• 8:05Martin Lewis?

  Before 18, right? So if you're putting this in because you think they might want to go and, you know, buy a PlayStation or whatever when they're 16, and you're putting it in when they're 10, this is the wrong product for you. You need children's savings accounts. Do use junior ISAs for money you want to lock away until they're adults. It is only accessible on their 18th birthday. That is the... People always say, I want to lock it away to 20. I get this all the time. Anything other than 18 is complicated, right? You can use fixed-rate savings accounts. It's more tricky with investments. But ultimately, the junior ISA is the product that says lock it away until they are an adult. Do also look at junior ISAs if your child may pay tax, especially if the money comes from their parents. Shall we do this? Deep breath here.

• 8:50Martin Lewis?

  Do children pay tax, Adrian?

• 8:53Speaker 03

  Well, if they earn anything, yeah.

• 8:55Martin Lewis?

  Yeah, that's the right answer. Children pay tax mostly, the mostly is important, just like...

• 9:02Martin Lewis?

  Adults and just like adults, they can usually earn up to twelve thousand five hundred and seventy pounds per tax year in their personal.

• 9:08Speaker 03

  So it's a hell of a paper round.

• 9:10Martin Lewis?

  It's a it's a hell of a paper round and it's a hell of a lot of savings interest. And in fact, if it were just savings interest, because the starting savings allowance and the personal savings allowance, they could actually earn up to eighteen thousand five hundred and seventy pounds from it. Yet money given to a child from parents or stepparents, not grandparents, not aunties, not uncles, parents or stepparents, there is a quirk in the tax rules that people need to understand. There is a hidden tax trap here. And that's the fact that if you give your children money as a parent or stepparent, and they earn over a hundred pounds a year of interest from the money given by a parent,

• 9:51Martin Lewis?

  equally from dividends, if money invested for them by a parent or not capital gains, that's separate. So dividends or interest and they earn over a hundred pounds, then that money by law should be taxed at the parents marginal rate. Now, why is this done first? We'll help you understand it. Dead simple. I've got a child, they can earn twelve thousand five hundred and seventy pounds a year. I'm going to put all my money in their name. I'm going to take the money back when I want. I'm just going to use them as a tax free savings allowance. That's what it is done to.

• 10:20Speaker 03

  But this doesn't apply, of course, if the if the money's in a junior ISA.

• 10:23Martin Lewis?

  No, it doesn't. That's the point. This is the point of a junior ISA. But I just want to go into this in slightly more detail. So if you think about the hundred pounds a year or more, it's not actually that much in savings. I mean, you can generate a hundred pounds, you know, these two thousand pounds in a savings account will generate a hundred pounds of interest. Now, when I say the parents marginal tax, it's where it gets a little bit complicated because remember, most people don't pay tax on savings interest anyway. Because most people are within their personal savings allowance, the a thousand pounds a year a basic rate taxpayer can get from interest on savings without paying tax. So if you don't pay tax as a parent, it doesn't really matter that your kid's earning the interest because they won't pay tax.

• 11:03Martin Lewis?

  But if you pay tax on savings, you know, you've used up your ISA allowance, you've got money in savings, you've used up your personal savings allowance, then your child will too. And that's the absolute time you want to use a junior ISA. Because a junior ISA, money put in by parents, is not taxable. Nothing, junior ISAs are not taxable, they're subject to inheritance tax, but if it's stocks and shares, there's no capital gains, no dividends tax. If it's savings, there's no income tax on the savings interest rate. So that is the real power of a junior ISA. So obviously, it's there to protect you from tax. It's there to lock money away. Now, the questioner, forgive me, remind me their name.

• 11:40Speaker 03

  Linda.

• 11:41Martin Lewis?

  Lind- Linda rightly said the top paying children's savings pay more than junior ISAs. Correct, but not after tax. So if you take tax into account, even at twenty percent, junior ISAs, cash junior ISAs, outpay children's savings, but if they're not paying tax, then children's savings outpay. So there is an argument for using those, but there is a bigger argument here for locking money a long way to invest the money rather than save it. Now, she says she's got thirteen and fifteen. If they're going to use the money at eighteen, then fifteen's getting relatively short on the time period for investing, but the thirteen year old you could invest. And I'll do best buys later, but hopefully that gives us a bit of a.

• 12:19Speaker 03

  I mean, she said she wants their cash for them when they turn twenty one, but to us, that's not, it's not her business. Hasn't lost aid.

• 12:26Martin Lewis?

  No, I mean, I mean, most parents, their kids, when they're eighteen, will look to their parents for the guidance anyway and for help with it. But I mean, maybe this is the time to talk to them about investing. And actually, I think at thirteen or fifteen, at those ages, one of the best gifts that you can give them is actually to talk to them and to educate them financially about the money that you've put away. And it's start of financial education for them. So I think I'd make the decision with them.

• 12:48Speaker 03

  But, you know, respectively, they are six and eight years away from being twenty one, so they might be looking at the investment.

• 12:56Martin Lewis?

  Yeah, they might be if they're going to do that, but you need to make that, have that discussion with them and look at what, look at what costs, what are they going to need at eighteen? Have you saved if they're going to university for that parental contribution we talked about last week? That gap that's based on parents' earnings that they don't get on the maintenance loan, is the money potentially for that? In which case, they might need it at eighteen.

• 13:14Speaker 03

  So is she best to open them a savings account instead? No, I think.

• 13:20Speaker 03

  This is to do with the interest.

• 13:22Martin Lewis?

  Well, it actually gets a little complex. So if we run through the path, investment would be your prime option and you'd want to do that in a junior ISA. I'll took it, I mean, we could do very quickly while you want to use a junior ISA for investing. Let's just do a little, we're bouncing all over the place here, but hopefully it's useful. So this is the really big thing you have to understand about tax on investing. Capital gains tax is a tax on the profit that you make. But capital gains crystallizes, I'm going to keep this simple, there are complexities, capital gains crystallizes in the year that you sell. So let's imagine that you bought an investment fund for your children. You put nine thousand pounds in it outside of an ISA, this is ten years ago.

• 14:07Martin Lewis?

  It's now you've done very well, ten years later, you've got thirty grand in it. So that is a twenty one thousand pound capital gain. It's gone from nine. Now, you might say, but hold on, I've had it for ten years. Doesn't matter. The fact you've held it for ten years doesn't matter. The fact that you might not have made any other capital gains in those ten years doesn't matter. So you've got that twenty one thousand pounds because you've sold it all at once, all crystallizing in one tax year. And the capital gains tax allowance, you're only allowed to make three thousand pounds of capital gains without it being taxed. Above that, it's taxed at eighteen or twenty four percent depending. So you've got twenty one thousand pounds of gains, we'll subtract the three thousand pound capital gains tax free limit, you are going to be taxed

• 14:50Martin Lewis?

  on eighteen thousand pounds of gain, even though you had it for ten years. So therefore, using an ISA, whether it's a junior ISA or an adult tax, to protect your investment is really powerful. The more powerful, if you're going to be investing and saving, I would tend to prioritize protecting your investment from the tax over protecting your savings from the tax in most cases. So that's why if you're going to invest, you do it in junior ISA. So we're going through that tree for the decision. First of all, invest in a junior ISA. If you're going to save and they might access the money and they're not taxpayers, because you've not put enough, then I would probably put it in children's savings because it pays more than a junior ISA. But of course, the money is accessible, so you've got to trust that they're not going to take the money out.

• 15:34Martin Lewis?

  If you want to lock the money away or they're going to pay tax and you're putting it in savings, then I would go for a junior ISA. That's my decision tree. Hopefully, I've got through that.

• 15:44Speaker 03

  There's some confusion here, or certainly the questions are betraying it, and I'm certainly confused about switching. So kind of Linda asked if she can switch from her junior sort of savings ISA into an interest, a cash ISA, into a an investment ISA. And Owen is asking if he can stand, if he can transfer from a standard junior savings account into a new junior stocks and shares ISA.

• 16:11Martin Lewis?

  Okay, so the first one is a transfer.

• 16:14Speaker 03

  Yeah.

• 16:14Martin Lewis?

  You have a right to transfer a junior ISA. So literally, even though the money's locked away till they're eighteen, that doesn't mean it has to stay with one provider. The way you do a transfer, and just to be plain, you can transfer a junior cash ISA to a new junior cash ISA, a junior cash ISA to a new junior shares ISA, a junior shares ISA to a new, to a junior cash ISA. You can do it any way around that you choose to do. You go to the new provider, you apply at the new provider and on its form, there will be, do you want to transfer? You fill that detail in and the new provider moves the money from your existing provider for you. So the answer to the first question is yes, absolutely. You can move from a junior cash ISA to a junior shares answer.

• 16:58Martin Lewis?

  The answer to the second question is, well, you've just got savings, that's just money in the bank. If you want to put that into a junior ISA, you can put up to nine thousand pounds.

• 17:05Speaker 03

  But you've got, he says, you've got to faff with closing the form or and manually moving the money into a new junior ISA account. Well, yes, you have.

• 17:11Martin Lewis?

  You've got to take money out of a savings account to put it into a junior ISA. Yes, you can't transfer it because they're different, they're different categories.

• 17:17Speaker 03

  Derek's got a question about junior ISAs. Why can't grandparents open a junior ISA? What physically stops you if we did? Is someone afraid grandparents can pay in?

• 17:28Martin Lewis?

  There's nothing wrong with you paying into a junior ISA. You have to think about this. Right, and it's actually probably more of an issue where you have split parents, where the parents are divorced and separated, and I get people who have those issues. Your child is only allowed one junior cash ISA and one junior shares ISA, and no more than a total of nine thousand pounds in both can be put in in a tax year. Now, the problem that you have to open a junior ISA, if grandparents often, oh, I'd like to put money away for my kid. And sometimes they don't even tell the parents. I've heard of that happening, that they're putting money in a savings account. Now, the problem with this is that means because you can only, unlike a children's savings account where they can have two hundred and eighty two different savings accounts if they want to,

• 18:10Martin Lewis?

  because they're just savings accounts, this is a specific product that you can only have one of each. So if you, if you widen the net of who can open it, it gets difficult, which is why the person with parental responsibility is the only person who can open the junior ISA. Now, even then, I've had lots of issues. I had someone recently who got in touch who'd had an absolute nightmare because their child had had a child trust fund, the predecessor of a junior ISA. They didn't really know about it because the state had opened it. They put money in a junior ISA for years. And then they found the junior ISA was invalidated because you can't have a child trust fund in a junior ISA. The child trust fund should have been moved into a junior ISA first. And this is a problem with split parents. If you both want to be putting money into, and you both want different ones, it, it, it is a.

• 18:53Martin Lewis?

  Which is why the law limits who can open a junior ISA, not who can put money in, who can open a junior ISA.

• 19:00Speaker 03

  In a kind of similar vein, Becca says she wants some advice for separated parents. My children had junior ISA accounts opened for them when they were born with my now. Ex-husband as the name responsible person. He now won't communicate with me about how much money he and his family are paying in over the years. So. I'm unable to contribute in case it goes over the threshold. Is there a good alternative account I can use to save for them? Ideally, both parents will be able to access the ISA account details. The HMRC rules seem to be out of date here.

• 19:32Martin Lewis?

  Well, the problem is you cannot open another junior ISA of the same type. Right. And, and if you open, you know, if that was a cash one and you opened a shares one, you've still got the nine thousand pound rule. There is no other ISA available for children. So you are looking at top kids savings. And I'm going to come onto them, but something like the Nationwide Flex One Saver pays five percent on up to five thousand pounds in it. It can be open for the children aged eleven to seventeen. Parents of guardian must apply for under thirteens in branch. Older children can open online and you can manage it online. So something like that, if you're looking at savings, obviously if you're looking at investing and you're doing it outside of junior ISA. Then it's just a general investment account, you know, people like AJ Bell or Fidelity or Hargreaves Lansdown.

• 20:15Martin Lewis?

  All offer those or the robo investors like Wealthify and Moneyfarm all offer that type of stuff where you can go and. Open a general investment account for them outside of an ISA. It, it's a difficult situation. It follows on. From the question about grandparents, you're starting to see the problem when it's a limited product. It's who has the right to open it for them.

• 20:33Speaker 03

  Claire, when my son turns eighteen, is there any way of getting a clause on his stocks and shares ISA to prevent him from spending it?

• 20:42Martin Lewis?

  No. And it's really important you understand the answer is a hard no. I often use the phrase, you know, junior ISAs, you want to save money till your kid's eighteen, but your little.

• 20:55Martin Lewis?

  Now, you don't know if they might not want to follow Harry Styles.

• 20:58Speaker 03

  Just don't tell them.

• 20:59Martin Lewis?

  Around the world.

• 20:59Speaker 03

  But just don't tell them.

• 21:00Martin Lewis?

  It's their money and they've got a legal right to control it from the age of sixteen anyway. They can't take it out, but they can control it. I think that's the wrong attitude. I would go the other way. I mean, unless, unless it's a child who's having, you know, some proper issues. This is a sit down conversation. I remember a story from my telly show, must be about. Twenty fourteen, there was a mother from Manchester, lovely lady, I think her name was Vicky. And Vicky had three kids and she was a, a single mum and she'd saved very hard for them. And she was petrified. That all the money she had saved for them, you know, was going to be. That they were going to spend it all and waste it because she's, and, and, and they didn't know about the money. And I think they were thirteen.

• 21:43Martin Lewis?

  Fifteen and seventeen at the time. So we did a film and I went with her to tell them. And it was a big, you know, it was a big reveal moment. And she gave it to the middle boy who she was really worried about and stuff. And she said, okay, I'm going to give it. You know, I've been saving this and here's your passbook. And he gave her the passbook and she said, but I don't want you to spend it. I, I want you to, you know, I want you to, to, to keep it because this is a nest egg for your future. And he looked at it and went, okay, mum, why don't you keep it? That was it. Right. And actually, the best thing to do is to educate your kids about this.

• 22:14Speaker 03

  But he did have a television camera pointing at him at the time, so.

• 22:17Martin Lewis?

  Well, he did, but we followed them up a few years later and it had all gone pretty well. And they got quite interested in it and they'd start to look after it and do it themselves. So, I mean, it. Good stuff. I mean, clearly there are some individual children who are having problems at eighteen, where there might be a risk and it gets very difficult. But that's the rule is. It is their money at eighteen and no, you can't put a clause in that I'm aware of. You might need to ask a lawyer if there's some way that they needed protecting from themselves, but otherwise no.

• 22:38Speaker 03

  But Nicola said, what's the best account to set up as a grandparent?

• 22:43Martin Lewis?

  Well, I go, if this goes back to that question. I think the question you have to ask is, what is the best account for the child? And the best account for the child may well be a junior ISA, certainly if you're investing it, in which case you will need to talk to the parents if there's a problem in that. And remember, one of the advantages of a junior ISA for grandparents, even though you can't open it. Is, um, you know, if you're worried about the parents getting their hands on it, they can't until the kid's eighteen. So it locks the money away from the child. It also locks the money away from the parent accessing it. I don't know if that's part of what's implied in the question. But as a grandparent, there are children's savings accounts that you can open. So when we go through those later, I'll, I'll detail some of those. But I, I don't let what you can open be the main dictating factor.

• 23:26Speaker 03

  Basil.

• 23:27Martin Lewis?

  Yes.

• 23:27Speaker 03

  You don't get many buzzles these days, do you?

• 23:30Martin Lewis?

  Not, not unless it's a herb shop.

• 23:32Speaker 03

  Basil, uh, if a grandparent pays into a junior ISA regularly out of their income, does that count under the. Quote, normal expenditure out of income exemption instead of the three thousand pound annual gift allowance?

• 23:45Martin Lewis?

  So you would need to consult a specialist tax advisor on this, but I'm going to give you a general answer. That was me caveatting to protect myself. I think I know the answer, but I have to be slightly careful. So the general rule on gifts out is if you are giving a gift out of income, it is not subject to inheritance tax. The key is that you would need to prove that. And what they generally say is it should be regular and obviously affordable out of your income. So making a regular gift and documenting that you're doing it on a regular basis, you know, having a. An email trail that you're planning to do this out of your income on a regular basis. And you're putting that money away in something that where there's an obvious pattern of what you're doing it. And it's coming when you're getting paid and all of those things would help it not count.

• 24:29Martin Lewis?

  Towards your estate for inheritance tax purposes as a grandparent to give it to your grandchild. I mean, there are lots of other gift allowances as well. But if you want to use it of the giving out of income, it's about regular and obvious gifts from income.

• 24:44Speaker 03

  Marty, where do you want to take this?

• 24:45Martin Lewis?

  Well, I think it is time to introduce our expert who's going to be coming in. We've got Anna McDonald, who's Investment Strategy Director of Hargreaves Lansdown. Hiya, Anna.

• 24:55Speaker 04

  Hi, hi, Martin. Hi, Adrian.

• 24:56Speaker 03

  Hi, hi there. So how should we play this?

• 24:59Martin Lewis?

  Why don't you ask the questions? I'll start and then I'll direct them to Anna for the technical stuff and offset it. So it's all on her. It's all on you, Anna.

• 25:06Speaker 04

  Great, thanks.

• 25:08Speaker 03

  Okay, Abby in Chichester is, uh, is, is calling in with this one. Abby, what's your question?

• 25:15Speaker 04

  My children have got several accounts that have been opened over the years to grab the headline interest, which is now. Not very good at all. So I'm looking to kind of group them all together so that they can get the best return to their money.

• 25:30Martin Lewis?

  Right. So let's, let's just do what accounts are available at the moment and what the best payers are. The top junior cash ISA is Leap Building Society at three point eight five percent. But if you want one that's available online, the top is NSNI, which is the state backed at three point seven percent. And top native easy access children's savings nationwide, five percent and up to five thousand pounds. But if you want to put more in. It's Kent Reliance Children's Saver, four point one eight percent on up to twenty five thousand pounds. If you're not getting all of these, you can listen to it back and slow me down in the podcast because it's boring radio. Top Children's Fix Savings, State Bank of India for one to three years, all at four point six five percent. But going back to the main point. How long are you putting this money away for, Abigail? What, what are you thinking it's for?

• 26:14Speaker 04

  So they're thirteen and fifteen at the moment and, um. Really it's for them for when they get to eighteen. So they've got a lump sum of money to either carry on investing. Or, um, to use for, to get a car, driving lesson, university.

• 26:31Martin Lewis?

  Well, just to check, you said investing and people do use the terms interchangeably. When I'm using them today. I'm talking about saving as putting the money into a cash equivalent where you get interest and the money is locked away. And investing is talking about when you put money in, into an asset, whether it's stocks and shares or bonds or another asset. Where you hope for higher growth, but at the risk you could have lower growth. I, I think, are they all saved or, or do you have some in investments at the moment?

• 26:59Speaker 04

  No, they're all savings. I did find the information you were talking about just earlier was really interesting and. I've misunderstood a few bits around junior ISAs because my fifteen year old missed out on the, um. Government money by a few months. So it, yeah, that was really interesting. I'm probably look to. Open up a cash stocks and shares ISA for them both so I can drip feed in.

• 27:26Speaker 05

  Some money in the longer term.

• 27:29Martin Lewis?

  Drip feeding is great. Drip feeding sort of spreads those short term ups and downs. So some months you're buying higher, some months you're buying lower and it averages out. Let's go to Anna here. Anna, what would you suggest with this money talking about junior ISAs?

• 27:42Speaker 04

  Well, hello, Abigail. I mean, I think potentially if your 15 year old is going to want that money at 18, he or she's only got three years ahead. And I think that perhaps that isn't quite long enough to start investing in stocks and shares. What you could do is try and perhaps park some of that money in a cash ISA and then do stocks and shares for the rest. It depends how much money you think they're going to want, they're going to need. For the 13 year old, that's five years. Now, that's a pretty good investment horizon. So something you could think about there is investing in stocks and shares or in a multi asset fund. That's

• 28:21Speaker 04

  a fund which has both stocks and shares and some other assets there. And the benefit of that is that it is, it's a bit riskier. You will have ups and downs, but it's likely to outperform your cash savings ISA. And when they both hit 18, if they do decide that they don't need all that money, roll that into their adult ISAs and try and keep that savings, that sort of putting money away every month or every year, keep that going. It's a fantastic discipline.

• 28:52Speaker 05

  Yeah, yeah, that's really helpful. Thank you very much.

• 28:55Speaker 03

  Thanks, Abby. Thank you very much. Laura's got a question. I have junior stocks and savings ISAs for my kids.

• 29:03Martin Lewis?

  Stocks and shavings?

• 29:04Speaker 03

  Stocks and shavings, it's a new.

• 29:06Martin Lewis?

  I like that, like little bits, spreading the risk because you get little bits of whiskers coming out everywhere, yeah.

• 29:11Speaker 03

  Exactly. The money's locked in till they hit 18 years. So this is no help if they want to buy a car or fund driving lessons, et cetera, at 17. I'd like to start investing in world ETFs for them.

• 29:23Martin Lewis?

  Yeah.

• 29:24Speaker 03

  World ETF?

• 29:25Martin Lewis?

  Exchange traded fund. It's basically a form of, I mean, I think she's talking about a global tracker fund and the way it's done is an ETF. We won't go into that complexity.

• 29:32Speaker 03

  Okay, so the money there will grow faster than a standard savings account. Any advice for setting this up, platforms, et cetera, or any other 10 year investment? That's likely to return eight to 10% annually. My kids are four and eight.

• 29:46Martin Lewis?

  Let's just sort of go clear on this for a second. When you're buying, you buy through a platform generally. So it's a bit like that, you know, if you want tickets for a gig, you you get your tickets, but it's sold through a ticket website. The ticket website doesn't own the gig venue, it just sells them. So you have platforms that do that. So we'll come on to what type of funds in a moment. But when you're choosing your platform, when it's junior ISA, both Hargreaves Lansdown, which is where Anna's from, which is why it's me, you should say it, not her, and Fidelity have no management fees for their junior ISA, though individual funds can have their own fees, depending on the funds that you choose. There's also the likes of AJ Bell. If you're, that's where with those type of platforms, you pick the fund. So there'll be less thousands of funds. You can also buy shares, individual shares, much riskier, though obviously in that platform.

• 30:31Martin Lewis?

  Thousands of funds, you pick a fund, you or you pick five different funds and you split your money across them and you could drip feed it. And you've got this huge big choice, but it's DIY, so you need to know a little bit. If you're new to investing, then an alternative is robo investors like Aviva's Wealthify Money Farm. They automatically pick for you from a far more limited range of fund. Sometimes it's actually their own funds and they do this by asking you a few questions about your attitudes to risk and your investment goals. Of course, if you've got a financial advisor, you should speak to them about what you're going to do because you're paying them and absolutely they'll guide you on this. So those are the way you would go to invest. Let's go a bit more specific. Anna, if you wanted to invest in a worldwide ETF, which ones would you go for?

• 31:16Speaker 04

  Something like a really established, the Vanguard Global ETF has been around since 2012 and it has delivered eight to 10% returns most years, but I mean, overall, but remember that each year is a bit different. The strong returns come over time. The worst year was 2022 when it fell about 18%, which is a big, big slug. But then again, there were five years where it was more than 20% returns. So it's about averaging out over the long term and being aware that the returns compound very nicely over time generally, but you can have some years where you have some quite big falls. And that's why I think

• 32:01Speaker 04

  putting this money away and trying not to worry about it and remembering that actually often on the news we hear, oh my goodness, the stock market's fallen, but we don't hear about those days when it's just incrementally gone up. So it's about staying invested and staying the course. The great thing about big four and eight is you've got several years of investment growth ahead of you and hopefully you can really let your investments ride out.

• 32:29Martin Lewis?

  Absolutely. The old maxim is time in the market beats timing the market. The problem most people find is this volatility, you know, but but let's just accept stock markets and markets by definition are volatile, by definition they go up and down, by definition they move with events. That will happen. You will move in and there will be days when your investment drops, which is why this is all about long term. This is all about, hopefully over the long run, you will smooth out those ups and downs and get better performance. And the more you spread it, the thing about a world ETF

• 33:05Martin Lewis?

  is it's investing in thousands of different companies across the world, big companies. So you're averaging out what bit, which bits of the world's doing well, which bits are badly. It's the big companies across the world. If the world economy is growing, then your ETF should grow. That's basically what the idea of it is. So it really is about spreading the risk in there. What's next, Adrian?

• 33:24Speaker 03

  Somebody called The Mamba wants two fund recommendations which offer diversity for long term growth. So many to choose from makes it difficult for those without deep knowledge. If only we had somebody with deep knowledge.

• 33:34Martin Lewis?

  If only, Anna.

• 33:37Speaker 04

  Thank you. Well, I mean, I think as we just discussed, having a global index tracking ETF, what that will give you is that really broad diversification in all these companies. And importantly, it comes at a low cost. And if you're investing over the long term, that can be really important. So choose, look for something with sensible costs. Martin's talked about time in the market and that's one of your free lunches. The other one is diversifying and that's making sure you've got a good spread of assets. Again, you can look at what are called multi asset funds too.

• 34:17Martin Lewis?

  So if you give it, so we've got a Vanguard one there and there are other world trackers. A tracker index, by the way, for people who don't know, is an index which just tries to mechanically track. So it's a fund which tries to mechanically track an index. The one most people know is the FTSE 100. The FTSE 100 is basically the biggest stock market listed shares in the UK. Doesn't mean they're all UK companies. It means they're listed here and many of them make their income from abroad. And so that index measures their sort of weighted performance. And what a fund that tracks that does is it tries to give you the same results as that, as that index. So of course you also get dividends, which is income paid from some of the stocks.

• 34:54Martin Lewis?

  And then if you choose to reinvest those dividends in buying more of the same fund, that's how it compounds. But there are other indices across the world. There's the S and P 500, there's global indexes. So when we're talking about a tracker, the difference between you have active management, which is where a fund manager is picking, I think these are the best stocks. If they do really well, it can be really good. But often because they're much higher charges, they have to do really well to beat a tracker. A tracker is cheaper because it's just matching an index. So if they were to go for a world ETF and what did they ask for? Two fund recommendations, another one that offers diversity, pump for one more. Give us something else they could go and research.

• 35:31Speaker 04

  Well, they could look at, gosh, I mean, I would go with just the global stocks and shares Vanguard, something like that. But if you wanted to diversify your holdings into another asset class, you could look at a bond fund too. But be aware that those returns are slightly, over the long term, they're slightly less than what you get in those in a shares fund.

• 35:53Martin Lewis?

  Cool.

• 35:54Speaker 03

  Okay. Franklin, please, would you recommend a V U A G or a V W R P for a child's ISA? Anna, off you go.

• 36:03Martin Lewis?

  Well, as a choice, so that's, those are Vanguard funds, aren't they? But I don't know what, do you know what they are specifically from the, just from the buying you are out?

• 36:09Speaker 04

  I, I do. The V U A G tracks the S and P 500. So those are the 500 largest US listed companies. There's a lot of companies, but you're making a bet on just one market there, the US, which has been tremendously strong, but it's not the only market out there.

• 36:30Martin Lewis?

  Although to be honest, if you're a global tracker, so many of those big companies are American anyway. You're quite weighted for American, aren't you?

• 36:35Speaker 04

  You are pretty much weighted, you're about two thirds in the US. The V W R P is the global version of that fund. So it's global exposure. It's got developed markets, so that includes the US and the UK. And it's got emerging markets, which are a lot of those Asian markets and Latin American markets, but they all have much smaller, they're much smaller parts of the, of the index, but they're of that, of that tracker fund, but they're still part of it. So you will still get exposure to that, to that, to the world and all the, all the biggest companies in it. And I think

• 37:14Speaker 04

  that gives you a nice level of diversification over the really long term and it does diversify you a little bit away from the US.

• 37:22Speaker 03

  Okay, and Ian, what if any situations are there where a cash junior ISA is better option than a stocks and shares junior ISA?

• 37:30Martin Lewis?

  Probably if you're not planning to have the money in very long is the most obvious one. You know, you're putting money in for a 16, 17 year old and they want to access it to 18. Remember, we talked about shares and investing being something over the longer term. So if you want that money and you're going to Need it quite soon. That's where you're probably talking about putting it in cash. But in most cases, because it's money you're putting away for a long term that you don't need. I would be hedging parents towards going for a shares ISA. But you don't have to make a decision. You could do both. You can have both. If you're nervous and you don't want to put all that money in investment. Cause this you're just not with it mentally yet. You could do with both. Anna, anything on that?

• 38:07Speaker 04

  Yeah, I mean, I agree with you. I would just say that if you can try and think about those smoothed returns over time that we talk about, that you can actually get a much better return over the long term. That it really does make a very considerable difference when you think about all the maths. So just to give you a little bit of that example. If you put in, say, fifty pounds a month from birth to eighteen into that ISA, you've paid in ten thousand eight hundred pounds. But if you let that, if you imagine maybe a five percent growth each year from your returns and investing, that's seventeen thousand three hundred.

• 38:47Speaker 04

  And if you let that compound until, you know, until they're sixty five, let's go for that. You don't pay anything more. You'll have a hundred and seventy one thousand. So from ten thousand eight hundred paid in to a hundred and seventy one thousand at sixty five, that's a, that's a really big amount from just that five percent average per annum return on your investment.

• 39:10Martin Lewis?

  Yeah, and, and look, I did a graph on my telly show where I showed the returns of savings versus the return of global index tracker and S and P and FTSE 500. And the audience literally gasped at that.

• 39:21Speaker 04

  Yeah, I remember that show. I do remember seeing that because it's so substantial, that change.

• 39:27Martin Lewis?

  It was, it was like four times as much. It is, it, it, there's no guarantees though. We have to be, there is no guarantees. But balance of probabilities, if you want a nest egg for your kid and you're putting money that you don't need away, which is chance to be what you are putting money for your kid, then taking that opportunity in a widespread of investments. It's what I do. It's what many people who work in the industry do. I mean, most people in the financial services industry are using, if they're putting money in a junior ISA, they're using a stocks and shares one. They're not using a cash one. That probably tells you something.

• 39:57Speaker 03

  Okay, let's, shall we give Anna a breather now?

• 39:59Martin Lewis?

  Yes.

• 39:59Speaker 03

  And Anna will be back for the podcast.

• 40:09Martin Lewis?

  Welcome to Martin's Money Mastermind for Adrian. Adrian, you were singing along to the theme tune. So delighted you are.

• 40:14Speaker 03

  I was groaning along to it.

• 40:16Martin Lewis?

  No, it wasn't. So this is Money Mastermind. Adrian has got twenty one right and forty three wrong in this three option multiple choice quiz, which means sadly you are still.

• 40:30Martin Lewis?

  No better than random chance in your picks. I just want you, I just want one week to be B R C. We'll get there. So. Listeners, Adrian has done something wildly out of character. He bought an item of clothing that was not beige. He walked into a store, found a lovely, admittedly expensive wax jacket and bought it. Bang, there and then. It made him look, if not quite rugged, then like a man who might own a pair of walking boots for reasons other than just visiting the garden centre. He paid two hundred and fifty pounds, took it home, walked around the kitchen twice in it and felt quietly pleased with himself. But then.

• 41:16Martin Lewis?

  Disaster strikes. The next day, the same shop launches a sale. The jacket is now selling for a hundred and fifty pounds. That's one hundred quid less. Adrian, what I want to know is what are your strongest? Legal. Rights.

• 41:33Martin Lewis?

  A, none. You don't have a leg to stand on, walking boots or otherwise. B, the Price Protection Act twenty ten, if the price drops within fourteen days with proof of purchase, you can get the difference back. C, within the same shop, obviously. C, there is no direct right, but under the Consumer Contract Regulations twenty thirteen, you have fourteen days to return it where you can get a full refund, then you could buy it again under sale price, assuming it's still on sale. So I'll just go through those again. Prices drop the day after you bought it. You're going back to the same store, the place that you bought it from. A, you don't have a leg to stand on. B, Price Protection Act twenty ten, price drops within fourteen days with proof of purchase, you can get the difference back.

• 42:14Martin Lewis?

  C, under Consumer Contract Regulations, you can at least have the right to return it within fourteen days, get a full refund, then buy it again at the sale price.

• 42:22Speaker 03

  Well, I don't think the last one applies unless you buy it online. There was some, there's something you keep telling us about that. There's different rules if you bought it online. And you're talking about buying it in a shop.

• 42:31Martin Lewis?

  You have bought this in a shop.

• 42:33Speaker 03

  Okay, I've never heard of that price protection. I can't imagine. I think it's just, I would certainly assume that's hard luck. So I'll go for A.

• 42:41Martin Lewis?

  So you're going for A.

• 42:43Martin Lewis?

  Well, Adrian, the Consumer Contract Regulations twenty thirteen do state that if you buy something online, you have a no fault right to say that you're sending it back within fourteen days and send it back within fourteen days of that. But that does not apply to stuff bought in shops. Adrian, however, the Price Protection Act twenty ten has not been heard of by many people because I made it up entirely and does not exist. Play the hallelujah.

• 43:16Martin Lewis?

  Music, literal music to your ears.

• 43:18Speaker 03

  Literal music.

• 43:20Martin Lewis?

  Yeah, and we don't have price protections in this country. I get asked about it all the time. It's really very common. That people think I've bought some, no rights. I mean, they put the price down the day after you bought it. You have absolutely no rights. Online, of course, you could send it back and you could rebuy. That would absolutely work. But in shop, it is just hard luck. So it's often worth, if you're buying something expensive, just checking, you're not going to be having a sale. And I've had, I've done that in store.

• 43:45Speaker 03

  Or, or, and I hate saying this, but buy it online. You get a bit of protection then.

• 43:50Martin Lewis?

  Well, and that is a problem for high streets across the country, yes, that you get more rights online. Well, but you only get the fourteen days if you do that. And the price may not necessarily be the same. So I, I think that's quite an interesting one. I tell, something just quickly, I was talking about with podcast producer Simon. Cause I've started to mention when we do our little chat, what option I think you're going to go for.

• 44:10Speaker 03

  Yeah.

• 44:11Martin Lewis?

  So I'm wondering if from next week, I have a prediction that I've locked in and we play both, how many do you get right? But how many do I get right of predicting what you're going to go for?

• 44:22Speaker 03

  I know what the outcome of this is because you've made the rules. It'll be a big ah ah for me and a big hallelujah for you. We now like, we, look, it's Martin's world. We all live in it. I aim to please you. Oh no, let's do that.

• 44:38Martin Lewis?

  The tellers, when did checking a bill or invoice properly save you money? What did you spot and how did you save it? Why don't you start?

• 44:43Speaker 03

  Claire, Michelin starred restaurant overcharged with a bottle of rosé wine, a hundred and fifty pounds plus an extra starter, neither of which we'd ordered. While they adjusted the bill, they didn't seem overly bothered.

• 44:53Martin Lewis?

  I like this from Daryl. I use Claude, so a large language AI, to review my landlord's statements from the rental agency. It compared them to my contract and discovered over a grand in extra fees and charges taken without permission. Wow.

• 45:09Speaker 03

  Jane, once got charged for twenty two instead of two halves of a locker. Normally I'd look on that as a challenge, but it was a school mind.

• 45:17Martin Lewis?

  Tracy, checked a food bill at a restaurant in London. It had a service charge added to it. The thing was, it was a help yourself to the salad type thing. So there was no service. I refused to pay it. The waitress spoke to the manager and she said I didn't have to pay. It was only a couple of pounds, but it was the principle. Quite right. Service charges are voluntary.

• 45:39Martin Lewis?

  So we're now into the pod only bit. Hello, podcast producer Simon. I presume we've got loads more questions still to go through. Yeah, we've got heaps of questions and yeah, we'll, we'll sort of crack on with this, I guess. Child, child savings account is the next one. Yeah, let's go straight in. Did you see that everyone? There's no preamble. There didn't no chit chat. We're going straight in. Look, with children's saving, I know we've got premium bonds, we've got child trust funds, we've got, we've got to get Anna back to come and do children's pensions with us. We've got loads to do. Don't want this to run too long. Yeah. I don't, I don't get paid overtime. And this is a topic that I'm personally very interested in. Well, yes, because didn't you have a christening last week? I had a, yeah, I had a really good week. So my one year old got christened last week. I've got a child that's nearly three and I'm personally quite interested in what my best options are for them. So this is exactly the sort of podcast.

• 46:23Martin Lewis?

  Can I ask if, if it's not too personal, did it move you from saving to investing from the conversation earlier? Well, so when my, my daughter who's nearly three, when she turned one, I opened a, like a kind of tracker fund for her that I now put a hundred pounds a month into. Amazing. But that is in my name in an ISA. So because I'm sort of wary about them getting it when they turn eighteen. Yeah. And I sort of feel like I quite liked a little bit of control still at that stage. And so we'll do the same now that my second child has turned one. So we wait until they were one because we sort of, basically my wife was still on maternity leave. So we sort of felt like we needed the money. Makes sense. Still here. So one thing, like a personal question, I guess. Yeah, do it. You've just, you've just shared your personal. So you're allowed one. Yeah.

• 47:06Martin Lewis?

  So when it comes to like university, under like the current, it's obviously impossible to know what things will look like in fifteen plus years time. Yeah. Would the amount they would get as a kind of grant or a student loan be affected by what sort of wealth they had built up in a junior ISA? Or what wealth I had built up in an ISA that I'm most planning to give to them? Simple answer is yes, it can do if they have a very large amount, but if it's, unless we're talking huge amounts, it's relatively negligible. It's all on your income. Perfect. Right. I could go into much more technical, but I, that's the simple, put your mind at rest. No, this isn't going to have that much of an issue. They'd need a huge amount for it to have an issue. So fingers crossed it will. Well, yeah.

• 47:46Martin Lewis?

  You know, fingers crossed you put into something, it's going to be, you know, have, it's going to be worth millions when they're eighteen and it'll cause you a problem. That's a good problem to have. Right. Let's do some, some of our listeners' questions. Yeah. So L. Stato, I have a savings account for my kids, but most banks only incentivize on low balances. If you have a bit more to put into an account for children, what's the best option? I don't want to lock it away until they're eighteen, just in case. Okay. So with all the caveats and looking at investing and all the other things we've talked about, the one with the highest limits is the Kent Reliance Children's Saver that pays four point one eight percent on up to twenty five grand. It's a savings account, so no cards. The good thing about this one is many of the accounts I've mentioned, like the Nationwide is only for kids aged eleven or over.

• 48:30Martin Lewis?

  This is for children aged zero to seventeen. You must open it and manage it by post or in branch. For most people that'll be post. If they're under seven, the parent and guardian must apply. So that all works pretty simply for you, that one. I would think that would be an easy topic for you. Russ has sent this in. People need to be aware that these savings are taken into account if the child has to apply for any. Means tested benefits in the future. I'm not saying don't do it, but making people aware of a little publicised consideration. Yeah, absolutely. When we talk about the difference between an ISA and a pension, and we'll be talking pensions later. Money in pensions don't count towards the amount of savings you have for benefits, ISAs do. And the general rule is if you've got less than £6,000, it's not taken into account.

• 49:13Martin Lewis?

  But at £6,000, it starts to reduce what you get up until £16,000, which is the maximum cut off. And yes, so savings can have an impact on the amount of universal credit that you might get. Russ is quite right, but I would still think building a nest egg for them, if you're in the position to do so, is the best thing to do. And Sophie's question, which reflects a lot of questions that we have. I have two children aged seven and 13, a small amount of inheritance which is currently sat in my own online bonus saver. Which savings account would you recommend to gain as much interest as possible, preferably open online? Well, again, I'd probably suggest if it's an inheritance, have a look at investing it. But I probably said that till the cows come home, so it's important I answer your question. Nationwide Flex One is the top payer.

• 49:57Martin Lewis?

  You've got HSBC and Santander, what's worth working at? Oh, I should have done this earlier. I've just realised what I haven't done. And we're not editing, I'm going to do it here because it's important. So just as an aside, just as a this week thing, there is currently, if you get the Santander 123 Mini Children's Bank Account and your child is aged 13 to 17, and it's the first time you've opened it. If you deposit 50 quid in it within 31 days, and at that point you can withdraw the money, you will get 50 pounds added to the account and it'll be added within 60 days. So if you put 50 quid in for your 13 to 17 year old, or they put it in, they get a 50 pound bonus.

• 50:41Martin Lewis?

  So they double their money, an easy way to double your money on kids' savings, only 50 quid with 50 quid added on top. The account itself has a contactless debit card and tiered interest. Savings rate isn't brilliant, but it's not awful. It's a decent 3% if you've got 1,500 to 2,000 pounds in. So you get 3% on the whole amount. If you've got less, 1,000 to 1,500 quid and you get 2% interest, you get 1% below a thousand pounds. Nothing above two grand, so don't put anything above two grand in it. But yeah, there's an easy way for your kids to make 50 quid. I like that one.

• 51:15Martin Lewis?

  Right, where are we going next, Si? Well, so we've got some more questions. These ones are based around premium bonds. Yeah. Grace, what's better, an ISA, and she's sort of flagged stocks and shares or junior versus premium bonds? I mean, I am no fan of premium bonds, especially for children. So I would have investment first, savings second, premium bonds third. You know, you're asking about investment. So the point about premium bonds is the current prize fund rate on premium bonds. And remember, premium bonds is a form of saving, it is not investing because your deposit is safe. The amount of money you put in is safe, where the amount that you get in interest is dictated by a prize draw. The current prize rate is 4.35%.

• 51:58Martin Lewis?

  That sounds good, although remember the top kid savings is 5%. So it's not quite as good as that. But the prize rate overestimates the amount that you will get. And in very simple terms, and I can go through sort of the probability and how it works. But if you've got median luck, which is how I define typical luck. So if you lined everybody who had that amount of premium bonds up in a row, and then you walked halfway down that and you took the person who was in the middle and you asked them what they would win, that is what I'm defining as typical luck. Now, for everybody with typical luck, you will win less than the prize fund rate. That's important to understand because for every very, very few people who win a million and win big prizes,

• 52:43Martin Lewis?

  quite a lot of people have to win less. Now, you get closer to that premium bond prize fund rate. Remember, it's tax free, though, as we've talked about before, most kids don't pay tax anyway. Once you've got over £5,000, that's a very rough rule of thumb for me for once you start to actually have a reasonable chance of winning something nearing the prize fund rate. You won't get the prize fund rate with typical luck, you might get it, be lucky and get more than that. But with typical luck, you won't. But once you've got £5,000 in, if you've got less than £5,000, the odds are you're going to win little or nothing. So, I mean, just to put it in, if you put a thousand pounds into premium bonds for a child, with average luck, you will win nothing.

• 53:27Martin Lewis?

  You will win nothing. So, and many people, those are the amounts they're putting in premium bonds or less for their children or their grandchildren. So who are premium bonds best for? They're best for those who pay tax on their savings interest and have used up their ISA allowances. As most children have small amount of savings and aren't taxpayers, for me, premium bonds are less appealing. Of course, there is the ludicrously small chance that your child might win a million. But then again, I could toss a coin and it'll land on its edge. Next question. Katie, why has the maximum investment of £50,000 in premium bonds not increased over the years? Just government policy, the way they want to operate it, how much money you want to bring in. I mean, they use it as a way to increase funds because it's the state owned institution.

• 54:12Martin Lewis?

  But there are some rules that it can't be unduly competitive because it tends to skew the market. Just because they haven't would be the simplest answer, I think. And Stephen, are premium bonds for grandchildren a good option? Is there a maximum I can invest each year per grandchild? I'm aware of the NS and I limits. The maximum is 50,000. It is 50,000 total, not per year. So while a junior ISA is £9,000 per tax year, which if you think about it, by the time a kid is 18, is going to be £162,000 you could put in if the limit stays the same. Then it's 50,000 pounds in premium bonds, but the 50,000, you could put it all in one lump sum. So it's just a different structure and the way that it works. That's enough on premium bonds.

• 54:57Martin Lewis?

  I've been nagging on them. Shall we go to child trust fund next?

• 55:04Martin Lewis?

  Let me give everybody a brief child trust fund rundown. So all UK children who were born from the 1st of September 2002 to the 2nd of January 2011, so aged now roughly 14 to 23, were automatically given a child trust fund. That's the predecessor of the junior ISA. It works in almost exactly the same way. You can put £9,000 a year in, the money was locked away until they're 18. It's important to understand if your child had a child trust fund and has one now, you cannot open a junior ISA unless you transfer the child trust fund into the junior ISA. And you could do that really simply, you just open up a new junior ISA and you fill out those transfer forms that I talked about earlier.

• 55:45Martin Lewis?

  The big difference between junior ISAs and the child trust fund is that the state paid £250 in to start child trust funds off. In some cases, it was £500 for lower income families. So even if no one else added to it, every child of that age had some money in. Unfortunately, many have lost track. So if you don't know where yours is, it's up to 760,000 people may have a child trust fund and aren't aware of it. With an average balance of £2,000, the average balance is bigger if your parents added to it or you invested it rather than you saved it in general. So you could be a lot less, it could be even more. If you want to find it, if you are aged 16 or over, you can go to gov.uk, fill in your details,

• 56:29Martin Lewis?

  look at child trust fund finder, and it will show you who your provider is. If you're a parent and your child is under 18, you can do it for them. So as you can hear, if you're 16 to 18, you can either do it for yourself or your parent can do it for you to go and find where it is. And it is very, very important that people do that. What are your questions? So Heidi's been in touch. What is the best thing to do with the money saved in a child trust fund once a child turns 18? I'm not sure what to advise my son. Well, the question is whether you want access to the money. It follows exactly the same logic we've been talking about the whole time. If you're putting it away for their future more than five years, I would look at investing it. If it's money that they will need it for imminently, you want to look at saving it.

• 57:12Martin Lewis?

  The one big and therefore going into, you could put it into a normal cash ISA or top savings if they're not going to pay tax. The one thing I would also look at is a lifetime ISA. So a lifetime ISA is a product you can put up to £4,000 in per tax year. And if you use it to buy a first time property costing under £450,000, the state will add 25% on top. So you put four grand in a year, they would add a thousand pounds on top each tax year. So if your child is definitely going to be buying a property in the next five, six, seven years, and it's almost certain to be under 450 grand, if it's over, you have to pay a penalty to get your money out, that's a problem. Then I would consider a lifetime ISA too. Gillian, my daughter is about to turn 18.

• 57:54Martin Lewis?

  Her child trust fund will have about £15,000 in it. Where should she put it for the next few years to get the best investment for her money? Well, I think what we've heard from our investment advisors throughout the programme is the obvious place to do it is big diversification, go into something like a global index tracker. So following what you've heard before, it's the same information. While we were talking about this for junior ISAs, it's, the rules apply for beginners investors right across the board in ISAs, whether they're adult or junior.

• 58:27Martin Lewis?

  Okay, Simon, so let's go into talking about children's pensions now and Anna is back. Welcome back, Anna.

• 58:33Speaker 04

  Thank you very much, Martin. Hello.

• 58:35Martin Lewis?

  Hello, Simon. What have we got? You've got the questions. Yeah, yes, we've got heaps of questions on this. First one is from Tracy. When and how can you start a pension for your child, please? And where would you start looking at providers? Well, I'm going to do this one and give Anna the really tricky technical ones later because it's my pod, so I can do that. So, right, so this is the rule. If you're lucky enough to have spare cash after you've maxed out your children's ISA, I do think starting a pension for your child might be worth considering. I also think this can be a great gift from grandparents, although parents do need to open it. But grandparents putting the money in, because if you think about it, you know, you've got little baby in swaddling cloth right now and it'll be, they'll probably be 60 before they get any access to this money,

• 59:20Martin Lewis?

  by the way that things are going. But when they're 60, they'll go, my grandparents did this. Thank you so much. Pension rules, the reason this can be done is pension rules allow even those who don't earn anything of any age to get the equivalent of 20% tax relief. That means for every 80 quid put in a child's pension, the pension firm automatically tops it up for the state. It's what's called relief at source. So your child would get 100 quid. The maximum someone who doesn't pay tax can put away is £2,880 a year, meaning they would get £3,600 saved in it. Of course, on current rules, the money's locked away till you're 57. My guess is for children right now, it'll probably be even older.

• 1:00:00Martin Lewis?

  But the big thing, when I talk about pensions, I always say, take the age when you start and halve it. And that's the percentage that you need to put in for the rest of your life as a really rough rule of thumb to what would be a decent retirement. Now, I mean, it doesn't work exactly, but basically what you learn from that is the earlier you start, the better. So if you're putting it in for a one-year-old, I'm not saying you have to put in half a percent for the rest of your life, but if you're putting money in for a one-year-old, then you can tell that by the time that that's compounded over 50, 55 years, it can be enormously lucrative. As for where you do it, well, all the platforms I mentioned earlier for SIPs also offer pensions. So that's my first answer. And I know we've got more technical ones and Anna, you're doing those. Well, Anna, you might get a shot at this one.

• 1:00:45Martin Lewis?

  Bodril, what are the best funds to invest in for junior SIP pensions? Anna, straight to you.

• 1:00:52Speaker 04

  Okay, right. So the really unusual thing about investing for a child's pension is the timeframe. You're investing money that won't be needed or accessed for several decades. And so this gives you something every investor would like more of, which is time. And that gives you the chance to invest over the longer term, to ride through those inevitable ups and downs of the markets. And that's why I'm going to say that you can invest in what we call equities or stocks and shares. So I think you want to invest in that and you are going to be able to really benefit

• 1:01:33Speaker 04

  from the several decades of investment returns that you're going to get from investing in companies. So something about you've got that time, you also want your diversification. So you want to have a broad array of investments. You don't want it all in the UK, you don't want it all in the US, you certainly don't want it all in one or two companies. You want to have a broad spread of investments. So something that can be a very simple and low cost, because that's the other thing you control, the cost that you spend on investing. A low-cost way is to invest in a global tracker fund and to just keep, let that keep compounding,

• 1:02:15Speaker 04

  add to it when you can, and just put it away and try not to worry about it. Because you are going to have moments when shares are doing well and when shares are doing badly. I mean, just think back to last year when we had Trump with his liberation day. The markets plummeted, but actually they had rebound and more within just three months. So just try and avoid any knee-jerk reactions, put it away and try and forget about it. That's my advice.

• 1:02:45Martin Lewis?

  So Anna, we've already discussed global trackers. Is there another concept that as you're going for a junior SIP and as it's so many decades, that you could actually go for something higher risk if you were within a pension than you would do maybe even for a 10-year period on a SIP? You know, you could go for a few more specific things. You could go for, I don't know, I'm making this up, not a recommendation, of technology funds, or you could go in a different direction. Do you think that's more suitable in a pension than in a junior ISA?

• 1:03:13Speaker 04

  Yes, I think you can do that. I think, though, that there's absolutely nothing wrong with having it simply invested. It's very hard to pick those, a lot of what we call active funds. That's when you've got fund managers who are trying to do better than the index. It's quite hard to pick those really good ones in advance. But what, when you say technology, what we have found in our research is that there are some real sector specialists. That can be in technology, it can be in healthcare, it can be in lots of different areas. Insurance companies, it sounds very niche, but you know, you really need to know your ups and downs and ins and outs in those sectors.

• 1:03:57Speaker 04

  And some of those managers do extremely well over the long term.

• 1:04:02Martin Lewis?

  Have you had any, you could tell us?

• 1:04:05Speaker 04

  I don't, I don't want to nail down specifics, but you know, I will be writing about them over the coming months. I think those are good, those are good ones. So for example, I've long admired and I do hold myself the Polar Capital Technology Fund. It has been very nimble and good at getting in and out of the right, in the right themes around technology. And that's got a very good track record. And I think there are some, you know, there are some riskier sectors, biotech funds and things like that. But you don't have to invest in them. You can get very good returns and very low cost returns just investing in those global tracker funds.

• 1:04:48Martin Lewis?

  Yeah, I mean, personally, I see myself over the long run, I see myself as a barbell investor, which is my definition, my phrase. So most of my stuff is at relatively within the realms of investing low risk, you know, high level of diversification. And then I have, that's at one end of the barbell. And then the other end, just with a very small amount of assets is at a very high risk, you know, going into individual things. I have to be careful because I can't invest in anything that I would talk about, which rules a lot of stuff out.

• 1:05:15Martin Lewis?

  And I think that that, I would think if you're going, if you wanted to be exciting within a SIP over the long run, you still want the bulk in that massively diversified, you know, your global trackers, your other types of tracker index. But there is, there is an opportunity, if you know what you're doing, to go for a little bit risky with maybe a few percent of the assets as you were to put it in there.

• 1:05:36Speaker 04

  Yeah, we call that a core satellite approach, or you, as you say, a barbell approach. And it can be a really good way also of engaging in investing. So, you know, bringing things to life, looking at those technology companies. But then again, we can also bring what's a simple tracker fund to life. The, if you look at those top 10, the top 10 companies in that, you'll find a Microsoft, you'll find Nvidia, you'll find Meta. You know, you find some different interesting companies in there that you can try and think about and bring to life. But I grant you, just having a line in your SIP saying Vanguard ETF or whatever is not likely to, you know,

• 1:06:18Speaker 04

  set your investing passions on fire. But underneath it, there are some very good, well-managed companies.

• 1:06:24Martin Lewis?

  So Simon, let's get through a couple more. Yeah, so the next question is from Tiffany. Junior SIP versus JISA. As a parent, if you could only afford to invest in one, which would you choose? Well, I'll do mine and then we'll see if Anna's answer is the same or different. I would always go for the junior ISA. I would go for the fact that your children are going to need the money in their adult life as a priority over going for the pension. For me, it would be make sure they've got immediate money that they need in children's savings. Then hopefully you're investing for them in a junior ISA. And if they're lucky enough to be getting full on that or have a decent amount in that, then you can start thinking about a pension. What would you say?

• 1:07:01Speaker 04

  I would say pretty similar because I think, remember that that junior ISA, even though it will have to become an adult ISA when they're 18, or it can become an adult ISA when you're 18, you can still benefit from that long-term compounding from that point. What I do think a junior SIP would be great, even though retirement seems so remote. If you, you talked, Martin, about that rule of thumb about how much you need to save. If you've got that pension pot building up already, by the time you're already well-built, actually, by the time you're in your 20s and 30s, that can enable you to meet those other costs of life because you don't have to worry too much about that pension.

• 1:07:43Speaker 04

  So, you know, you could, if you're thinking, we all know how difficult it is to get on the housing ladder, for example, and various different aspects. But like you, I think...

• 1:07:53Speaker 04

  Junior ISA, keep that invested if you possibly can. If you can afford to also use that to fill up that pension, that's a great thing. And remember, you get what we call that pension relief of 20%. So, you know, that £50 a month in would actually be £62.50 a month in your SIP. And the difference of compounding over the long term on that is quite remarkable. So you've £62.50 a month from birth to 65. You're paying £39,000 in as a family. Your gross amount invested will be £48,750.

• 1:08:33Speaker 04

  But if you can get 5% growth on average per annum, that's £350,000 at the age of 65.

• 1:08:40Martin Lewis?

  They are both very good, Anna, but this is not a pod where we let, you've heard Adrian in the mastermind, this is not a pod where you have an easy ride.

• 1:08:48Speaker 04

  No.

• 1:08:49Martin Lewis?

  A parent has £50 a month to put away for the children's future. It is a newborn. Where you've got your 50 quid, if it were you, so we're not asking you for advice, we've just got, if it were you, 50 quid in junior stocks and shares ISA, 50 quid into a SIP or 25 quid in both, which would you do?

• 1:09:09Speaker 04

  I think 25 pounds in both.

• 1:09:11Martin Lewis?

  Okay, there you go. You heard it here, everyone. And you've got one more, I think, Simon. Well, so we know what you're going to do with a newborn. We'll find out what you're going to do with a 10 year old now. Paul, is a junior SIP a good option for my 10 year old son if I wanted to save just £50 per month? I understand at 18, he needs to take over paying into it. So I thought that £50 per month would be easy for him. I think it is very important for somebody his age to save for retirement. Well, we both agree with that. The only thing I would say is he doesn't have to keep paying into it. I mean, it would be great if he did, but the idea that when he's 18, he has to keep up the £50 a month, he doesn't. I mean, he could, and that would be a good idea, but you know, there could be temporary respite and also remember when he's older, he will have likely, if he's an employee,

• 1:09:54Martin Lewis?

  he'll be auto enrolled so that the company would have to contribute to. But I think we're both, we're pretty clear, aren't we? A SIP is definitely something to look at, Anna.

• 1:10:01Speaker 04

  Yeah, no, absolutely. And £50 a month doesn't sound like hugely life changing at the moment, but think about that compounding over time and it will be, it is definitely going to be worth it when they come to retirement, even though that is, goodness me, at least 50 years away.

• 1:10:18Martin Lewis?

  That's wonderful, Anna. Thank you so much. That's Anna McDonald, Investment Strategy Director at Hargreaves Lansdown. You've been fab, we've really liked having you on the podcast. Thank you for joining us.

• 1:10:27Speaker 04

  Thank you. Thanks for having me.

• 1:10:29Martin Lewis?

  It's a pleasure. So yes, thank you very much to Anna. Thank you very much to Simon. That's it for the podcast. It's been a big one, but hopefully lots of really important and interesting information for you. Do get in touch, [email protected]. If you've got questions on this or anything else, if we're not doing them in a big issues podcast, they can always go into the Question Time podcast that comes out on a Monday. Thanks for listening.

• 1:10:54Martin Lewis?

  That's it for this week. We tend to put out a new episode every Thursday and Monday, which is our Question Time podcast, where you can ask me absolutely anything and everything. If you've enjoyed today's show, please tell your friends you've been listening to the Martin Lewis podcast and why not subscribe and leave us a review? Then your pockets will be pleased with you and we will be too. And if you haven't enjoyed it and you've been listening this long, I mean, what more do you want from me? Why have you stayed? It's been hard. Sometimes I just don't understand you.

• 1:11:41Martin Lewis?

  Martin Lewis is the founder of moneysavingexpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected]. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

• 1:12:17Martin Lewis?

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• 1:13:00Martin Lewis?

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• 1:13:44Martin Lewis?

  But the truth might actually be a lot scarier. For our take, join me, Jess Maddox. And me, Thomas Germain, for The Interface. Listen on bbc.com or wherever you get your podcasts.