With 2020 already in its second month, it is only natural to notice that time flies. It could be time to think about the future, and the kind of financial challenges our children may face in it.
At Continuum, we can help provide the answers you and they need.
Making money fun
Collecting comes naturally to many children, and most will understand the idea of saving as soon as they are old enough to count. Watching their money grow is great fun – and it is even more enjoyable if those savings are growing by themselves.
Opening a savings account for your child is a great way to encourage a savings habit as well as grow a nest egg for his or her future. The fun comes from seeing their cash growing with every deposit and interest payment – and of course, these days they can keep an eye on their account online.
You can set up an account with a bank or building society on behalf of a child of any age, although for the account to be in the child’s name they will need to be at least seven. Children’s Easy-Access saving accounts allow you, and your child to contribute and withdraw money whenever you want, while children’s regular savings accounts can provide better interest rates, although you may need to commit to monthly contributions.
A child savings account encourages the savings habit and solves the problem of what to give for Christmas and Birthdays for years to come. At Continuum we can help find the most rewarding account for your child – call us for details.
Becoming a junior investor
Junior ISAs or JISAs are another way to save for your children. You must be a child’s parent or guardian to open a Junior ISA, but once opened, anyone can pay in. All you need to do is start a regular savings plan from £50 or invest a lump sum from as little as £1,000. Parents and other relatives can contribute to £4,368 in the current tax year.
The child can only access the money when they turn 18, making a cash JISA ideal for building up a lump sum for college or the deposit on a first home. Like other ISAs, the JISA is tax efficient, although very few children will pay tax on their savings anyway. However, any money put in will retain its ISA protection after the child turns 18, when they can transfer it to an adult ISA. The child and others can contribute up to £4,368 each tax year, which means it could be a very astute way of building up a sizable ISA pot to get their adult investing off to a good start.
But with most savings accounts, the problem of low interest remains. Saving is good but watching the value of savings being whittled away by inflation is not.
The answer could be to help your child become an investor, with a Stocks and Shares Junior ISA.
Like standard ISAs, Junior ISAs can be held in stocks and shares as well as cash and you can pick from a wide range of funds and investment styles, from cautious to entrepreneurial, and a wide range of markets.
At Continuum we can help your children discover that investment is fun as well as rewarding – and find the best performing investments. Call us to find out how.
Most children are risk averse and prefer the idea of making money grow without the fear of losing it. Many products aimed at children may therefore be designed to minimise the risks – although the ability to choose might be the perfect opportunity to discuss financial planning with your child. Setting up basic savings and investments with your child can be easier if you use our Cash Calculator and see our Guide to Tax Efficient Investing
It can be easier still with some expert help. At Continuum, we would be very happy to provide the help you and your young investors need.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested. Equity investments do not afford the same capital security as deposit accounts.
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Book an initial consultation with one of our independent financial advisers or call us on 0345 643 0770 if you would like to discuss further.
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