The Best Ways To Invest In Your Children’s Future
Having a child is expensive in the day-to-day costs so saving for their future might not be top of your agenda. But if you are thinking of the best ways to invest in your children’s future you’re in the right place.
Research from ethical bank Triodos said that 14% of parents are not saving for their children. But those that are want their investments and money to be making ethical choices. 65% of parents with kids under 18 said that it is important that their children’s savings help to protect the future of the planet. And a massive 60% of women said they’d move money out of junior ISA’s that were having a negative impact on people or the planet.
Getting started with saving for your children’s future
If you’ve not yet opened a Junior ISA then check out my recent post with more info on what it is and how money goes in and out of it. Now is the perfect time to maximise your kid’s allowance of £9,000. Although you don’t have to put in anywhere near that much, just how much you can.
The money placed in a Junior ISA can grow tax-free forever, although it converts to a standard adult ISA when they turn 18. And thanks to compound interest the longer it’s tied away the more interest it can make. The interest rates vary from bank to bank so do your research before applying. With an interest rate of 2.95% your child can get £11,000 when hit 18 with just a £50 saving a month. If you are able to max out the £9,000 they’d get over £216,000 at 18!
Choosing a Stocks & Shares ISA
If you go for a Stocks & Shares ISA to save for y0ur children’s future you could be looking at getting a much higher end figure.
If we assume a 5% annual growth if you invest, you’ll have over £16,000 saved if you put aside just £50 a month for 18 years. A massive 5K more than with a standard ISA. And if you can put in the max 9K you’ll be laughing!
“The great thing about investing for children is that you have time on your side to let the stock market work its magic. There’ll be some good spells and bad spells along the way, but that eighteen year time horizon gives you plenty of time for your investments to come good,” Moira O’Neill, head of personal finance, Interactive Investor, says.
If you are looking to make ethical or green investments in your children’s future you can choose the types of companies and businesses you invest in. Most banks will offer green or ethical investment options so make sure you shop around. A lot of investment apps allow you to open Junior ISA’s so they’re a good place to start.
Look into fee’s when investing in your children’s future
When you pay into a Stocks & Shares ISA’s there’s usually an annual management fee to pay so keep an eye on this.
If you’re only investing smaller amounts avoid flat-fee providers as this will eat up your savings. You should be looking to pay 0.5-1% in fees. If you are paying more than it’s worth switching provider which you can do. You don’t have to stay with who you opened the Junior ISA with, although look at the terms to see if there are any fees.
Recent cost disclosure rules do require platform providers to disclose all costs and charges so keep these noted down.
Be prepared to lock it away
Regardless of how you put away money for your children’s future- a standard or Stocks & Shares ISA- be prepared to keep it locked away. Remember once you put money in you can’t take it out as it belongs to your child. And they can only access it when they’re 18.
But the money doesn’t have to come out when they’re 18, it can stay in there gathering interest and growing until they’re ready for it. Hopefully it can help towards buying their first home, or fund further education. But once they’re 18 it’s theres to do with what they want so you can’t stop them spending it. So you’ll want to get them into good money habits from a young age.
If you have kids have you started investing in your children’s future?
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25 responses to “The Best Ways To Invest In Your Children’s Future”
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Rhian Westbury
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One of the best things my parents did for me was invest in my future when I was a kid! These are brilliant tips and I know I’ll be following these when I have my own kid one day. 🙂
It’s definitely going to be a priority if/ when I ever have kids x
So important to set up investing for your children as soon as possible as set up good money habits early on!
So true, money habits can start young x
Great post. I have my investments in similar vehicles for my children’s education.
I can’t agree more and can’t stress enough how important to invest in our kids’ future including education. Great insights.
The money has a good amount of time to grow then x
These are definitely things that I have to look into now that college is becoming more imminent. Everything is so expensive!
So true, everything is so expensive x
These are great tips. I’ll share with my new parent friends aswell. Thanks for sharing!
It is so important to set up your child’s future, and by investing for them, you can really give them a head start in the world! Ensuring it’s there when they are ready is really, really important. Thank you for these tips!
It’s such a good starting point for any kid to get when they’re older x
If we had kids, by far the biggest thing I’d do is start investing into stocks! I only started doing this for myself about 10-15 years ago and wish I’d started a heck of a lot earlier!
There are so many things I wish I’d done 10 years ago when I had the disposable income haha x
We have but we have had to pause it for a little while whilst we get back on our feet after a rocky few months. Can’t wait to get back to it though.
These are great tips for any parents/parents to be. My parents saved for me, and I’m very grateful for this as an adult.
I got a bit of money at 18 but by the time I’d gone on my first holiday away and bought a new TV it was gone haha, I probably could have spent it wiser x
I don’t have children, but I do realise it is very important to invest in your child’s future. My mother has paid for my university, there was no way I could have done it on my own when I was a student. It’s good to have your children starting their life with no debt.
All 3 of my kids have child trust funds. They have had them since they were babies and we have been putting a little away each year. So when they are 18 hopfeful they will spend it on something worth while
We don’t have kids, but my Dad set up an ISA for each one of my nieces and nephews and we all add money to it every month so they have something when they need it x
That’s such a nice thing to do, the money will make more of a difference when they’re older than little bits here and there now x
My daughter was lucky enough to have a child trust fund and my parents paid into it each month. She also had a savings account which my Mum took out for her when she was a tiny baby, where we would all save our change and pay it in and her birthday and christmas money would go in it if she didn’t want to buy anything so it was there for when she wanted it. A great way of teaching them to save
I think it’s such a good to put birthday and Christmas money in there x
We’ve saved for our kids since they were born so at least they will have something when they are adults.
I’m sure they’ll be super thankful to you when the time comes x