Saving for your children

Peter1988

Hello,

I was wondering how much people save for their childrens future?

at the moment I'm putting away £20 a month for each of my children and I have done since they were born. 1 is in a Child Trust Fund, the other a Junior ISA. They both earn roughly the same interest. This amount per month put into their savings will increase as my salary (hoepfully) increases over the years.

My worry with that is, by the time they are actually able to access the money, will the predicted amount be worth alot less then than it is now? Based on the amount saved so far and paying £20 a month until they reach 18, they'll have £4000.00

the interest rates are pretty poor.

Any comments on what others do in preparation for their children growing up greatly appreciated. If there is a better investment alternative or if you think this amount per month is not enough etc.

Thanks

atush

Exactly.

Which is why when I did the same (although I couldn't afford to start when they were born) I did not save in cash, but in investment trust savings plans instead. you can probably transfer your cash CTFs and JISAs to something similar.

Equities will outperform cash, over longer periods.

bigfreddiel

start a pension for them, they'll thank you for that and also they cant touch the money till age 55 or whatever it will be in 55 years time- that way they wont squander it on drink, fast cars, etc

fj

xylophone

If you wish to stay in cash for the JISA, transfer to the Halifax JISA (provided you have a Halifax ISA) would get the current best available rate (6%). http://www.halifax.co.uk/isas/ See "Children's Cash Isa".

The CTF cannot be transferred into JISA although this may change. http://www.guardian.co.uk/money/2013/mar/20/child-trust-fund-junior-isa

You could transfer the cash JISA into a stocks and shares JISA if you wished or you may split the allowance between cash and stocks and shares. https://www.gov.uk/junior-individual-savings-accounts/overview
http://www.jisa.org/

You could transfer the CTF to a stocks and shares CTF but you might prefer to leave this alone until any rule change is clarified? http://www.kidstart.co.uk/View/TrustFundProviders.aspx

srcandas

bigfreddiel wrote: »

start a pension for them, they'll thank you for that and also they cant touch the money till age 55 or whatever it will be in 55 years time- that way they wont squander it on drink, fast cars, etc

fj

I mean you wouldn't want your kids to enjoy life :rotfl:

bigfreddiel

srcandas wrote: »

I mean you wouldn't want your kids to enjoy life :rotfl:

absolutely, but let them pay for it - far too much molly coddling going on -let em stand on their own two feet :rotfl::T:rotfl::T:rotfl:

fj

srcandas

bigfreddiel wrote: »

absolutely, but let them pay for it - far too much molly coddling going on -let em stand on their own two feet :rotfl::T:rotfl::T:rotfl:

fj

Couldn't agree with you more.

And as I said before this tying money down in child accounts is insanity imho It is hard enough to protect wealth and much harder to create it. And a child needs a family more than it needs £4000. And if all goes well the parents can give their child £4000 at the right time. Mine did when I bought my first house at age 22. Now had they given it to me at some random time I might well have spent it on wine, women and song

jimjames

srcandas wrote: »

I mean you wouldn't want your kids to enjoy life :rotfl:

If their pension is sorted then they can do - at least one less thing to worry about!

The power of compounding means that the amount put in at age 1 might be many times less that what would be needed if starting at age 30.

srcandas

jimjames wrote: »

If their pension is sorted then they can do - at least one less thing to worry about!

But is it the most important thing? Is a child's pension a parent's highest priority?

An example: Extra professional coaching before an exam might lead to a more enjoyable and more highly paid job for a working life of over 50 years.

jimjames wrote: »

The power of compounding means that the amount put in at age 1 might be many times less that what would be needed if starting at age 30.

And the compounded money could be put into a pension at a later time (perhaps with higher rate tax relief ) so nothing lost but at least some flexibility.

:beer:

jabba42

I think you should look after your kids until university and that is it. Equip them with the skills for life with good education, teach them that by working for someone else your earning power stops with an hourly wage.

A friend of mine's father said to him at 18, "Ok I have got you this far, now you are on your own". He says it was the best thing his father ever did for him. Tough love makes you stronger. My kids can have my cash, when I die.

xylophone

My kids can have my cash, when I die.

It can be tax efficient to "give with warm hands" as they say.

Apart from that, there's the warm glow of pleasure when you see your child benefiting from the gift?