These are the six investment hacks you need to take to give your children a good start | Personal Finance | Finance


Parents looking to give children a good start in life need to think beyond topping up their piggy bank, say investment experts.

Making contributions to a Junior ISA is a good place to start, however it is important to look beyond simply leaving the money in cash and hoping for a good rate of return.

Now is a good time for parents to investigate their options if they want to build a nest egg that is worth something by the time they reach 18, according to Laura Suter, director of personal finance at AJ Bell.

She said: “Putting some money aside for the kids is an item that’s perennially on parents’ to-do list, but often gets lost amid the day-to-day chores of life.

“Getting your offspring set up with investment accounts and starting to filter money in won’t take a huge amount of time – and could mean you hand them a sizeable savings pot when they turn 18.”

Ms Suter continued: “Many parents who do start saving for their kids default to cash – 42 percent of the money put into Junior ISAs went into cash, government figures show.

“But we know that over the long term investing is more likely to generate higher returns than cash.

“Over the past 10 years, £1,000 invested in a global tracker fund would have turned into £3,268, while that same £1,000 invested in the average cash ISA would have returned just £1,096.”

Six ways to get children on the right financial path

Pick the right account

A Junior ISA is a good option for many parents: you can pay in up to £9,000 a year, the money is ring-fenced in the child’s name and it’s locked up until they turn 18.

If you want a bit more flexibility or might want access to the money before the child’s 18th birthday, the money could be saved in your own ISA.

A longer-term option is a pension for your child: a junior SIPP.

Under these you can save up to £2,880 in this account, which will get topped up with tax relief from the government to £3,600.

This is a very long-term option the nest egg cannot be accessed until they reach retirement age.

Automate everything

Just like setting up direct debits to pay the bills, you can also set up automatic investments on most platforms, by arranging a direct debit from your bank account.

Many investment platforms will allow you to start regular investing from as little as £25 a month. You can always pause it one month if you need to skip a month.


Track down lost accounts

You may have got started on your savings journey for your child years ago but left the account untouched or lost track of where the money is.

Track down the paperwork and consider transferring it into one place to make it easier to manage.

Parents of older children may also have a Child Trust Fund. .The funds can be transferred it into a Junior ISA, which will often have a broader investment choice and could have lower charges.

Work out what you can afford

A Junior ISA has a very generous £9,000 annual limit.  Someone who saved the full £9,000 each year from birth, who saw investment returns of 5 percent a year, would be handing their child a pot worth £266,000 on their 18th birthday.

If you had even more money and could also max out their Junior SIPP each year from birth.

Even saving £25 a month from birth means you would have a pot worth almost £9,000 by their 18th birthday, assuming 5 percent a year investment growth.

Upping that to £50 a month from their fifth birthday would deliver £15,000 at 18, assuming 5 percent a year growth.

Saving £100 a month from a child’s 10th birthday gives them a pot worth £12,000 at 18.

Get grandparents, friends and family involved

Once a Junior ISA account is opened other people can easily pay money in.

Grandparents or other family and friends can make a one-off payment, for a birthday or Christmas for example, or they can set up a regular monthly investment. Collective contributions must not exceed £9,000 per child per tax year.

Select your investments

When choosing where to place investments it is important to decide whether you will pick them yourself or outsource the task to a fund.

You will want to weigh up using an active fund manager, a passive fund – or a mix of both.


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