The importance of saving up for when they grow up!
As the Royal Family celebrates the birth of baby Princess Charlotte Elizabeth Diana, The Children’s ISA look at the importance of saving up for when they grow up!
It is widely accepted that where possible all new parents should look to build a nest egg for their Child and approach this by investing little and often into a Junior ISA. Investing in a stocks and shares Junior ISA could provide the best returns when investing for young people. With no fixed rate of interest, parents don’t have to scrimp and save just to put money away to get the best rate, and might well be surprised with the lump sum when their child reaches adulthood.
A little can go a long way when you start investing early
The annual subscription limit for this tax year is £4,080, and the investment period could span up to 18 years if you set up a Children’s ISA at birth. The maximum amount a parent could put away is around £340 a month, however even with a monthly saving of £100 over £20,000 could be saved by adulthood. Income generated is automatically re-invested to add greater weight to the power of compounding returns. Data shows that, over the long term, shares almost always produce a better return than cash held in savings accounts. The key is to achieve a good balance of growth and risk. This means that even parents who save little and often may be able to build up a reasonable nest egg by the time their Prince or Princess reaches their 18th birthday.
As the Junior ISA rolls into an Adult ISA at the age of 18, it helps build familiarisation with the benefits of investment and financial house-keeping at an early age, setting up young adults with financial knowledge and understanding for life. It can help young people fund the important milestones in life, such as contributing to ever-increasing student fees or as a deposit for first-time home buyers.
The Children’s ISA have a choice of four different investment options for parents considering investing for their Child’s future: Actively Managed, Low Cost, Ethical and Shariah which offer a fund for all investment approaches. Look at the investment options at thechildrensisa.com for more details.