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. Funds are seen as the best choice for those who are not investment professionals as they invest in thousands of companies on your behalf. 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.) (Blue Tree Savings Ltd 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 yet still charge high fees.

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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. 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 UK 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/

Note: You can open an account in your kids name or open in your name and share this with your kids. 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.

 

* 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. 

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