GuideHow to set up an Investment Account

In order to invest for your kids, you need to set up an investment account with an investment service provider and choose an investmetn fund. 

Whilst Blue Tree does not provide investment services, tax or specific investment advice, the below guide will help you with the practicalities of setting up an investment account. 

Step 1 - Select an Investment Fund

First you need to select where to invest your money. This can be either a share (a company) or a fund (a batch of shares in different companies). Funds are seen as the best choice for those who are not investment professionals. The market leaders in providing funds are BlackRock, Fidelity, HSBC, L&G and Vanguard. 

 

To give a good example: Vanguard All Cap Global Fund (acc) invests in the entire stock market (globally) and the management fee you pay them is low cost (e.g. 0.23% p.a.) (BlueTree is in no way associated with Vanguard or any other fund provider*).

 

This fund tracks the stock market (known as 'passive investing') rather than investing in a specific fund manager who says they can picks individual stocks aiming to beat the market ('active investing'). The reality is often active managers rarely beat the market over the long-term but still charge high fees.

Funds currently being tracked by Blue Tree 
Click to find out more about each fund.
Please contact us here if you would like to request a new fund to be tracked. 

Step 2 - Open an investment account

Once you have chosen your investment fund you need an investment account which will allow you to transfer money to the investment fund so they can invest in your chosen fund (or company). Examples of current popular investment accounts include Cavendish, Fidelity, Hargreaves Lansdown, Interactive Investor, Vanguard, and major high street banks. Before opening the account, you need to check that they have your chosen investment fund available on their platform. When you pick your investment account do consider which has the lowest account fee. 

Vanguard for example has an investment fund and account so you can invest directly with them and to keep costs down.  https://www.vanguardinvestor.co.uk/

To compare different accounts you can visit boringmoney.co.uk

Note: You can open an account in your kids name or open in your name and share this with your kids (covered in step 4). Opening an account in their name might be subject to high minimum amounts you to need to pay in each month (e.g. £100 per month per child for some accounts), however, if you do pay these amounts then there could tax advantages if using a Junior ISA. If you are opening an account in your name then consider opening the account as an ISA (if you haven't used all your annual allowance). 

Step 3 - Set up automatic investing

Most investment accounts provide you with the choice of investing a lump-sum or investing regularly (monthly).  Saving and investing regularly may be viewed as wise as it means that you are not taking a view on when markets are good or bad.  Very few people (if any) have the ability to know when markets are good or bad.

For some accounts the minimum amount that you have to invest is £100 per month.  You don’t need to ‘gift’ that all to one child (now that would be generous!). For example, you could notionally say that of £100 per month put into the account, £60 would be a ‘gift’ between three children (£20 each) and the remaining £40 for you as parents. Essentially one account shared between four parties (3 kids and parents).

* The investment funds mentioned on this page should not be taken as recommendations. You should read about about provider or seek advice before making any investments. Blue Tree Savings is not licensed to provide advice on specific investment funds. 

Step 4 - Share your account

With an investment fund set up, you can now focus on sharing this with your kids. You can easily track and share this fund in the Blue Tree Habit Maker.

 

Simply sign-up and say how much you are investing for yourself and your kids and on a monthly basis it will update their own balance including any returns.  You may also include top-up gifts from special occasions and, add new kids over time.

 
Any questions? Contact us

We are here to help. Contact us by email or via our social media channels.

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