Many parents or grandparents are in the fortunate position to be able to save for their family and so often need advice on what may be the most suitable route.
With so many options available, where do you start? A bank account, Junior ISA, Child Trust Fund or shares, to name a few? Protection from inflation also needs to be considered.
Your timeline is very important. A savings account for a toddler has a longer time horizon, and maybe you could afford to take more risk. On the other hand, putting money aside for a teenager will probably need more security, and may be better suited to a deposit account. Your attitude to risk will probably drive the most suitable investment.
Cash flow planning could assist in demonstrating how much will be needed in future, incorporating inflation adjustments and future growth rates. We can illustrate how cash could be made available on a term-by-term basis through university.
Here are some considerations:
- Use personal allowances – the child will be able to earn £11,850 tax-free(2018/2019 figures)
- Are Junior ISAs or Child Trust Funds suitable?
- Trusts – these may provide the saver with more control over the investment.
- A pension contribution for the child may be desired.
- Friendly Society savings bonds may offer a suitable solution.