Saving for children What’s the best way to do it?

Building up a nest egg for your child’s future can be extremely rewarding – whether it’s for tuition fees, a car or even a deposit on a house, it’s something they’re sure to appreciate when they’re old enough to receive it! If you can afford to put aside a bit of money every month, it can be one of the best investments you ever make for your child.

 While there are numerous savings accounts you can use to do it, it’s usually best to use Child Trust Funds or Junior Isas – this being because they’re both tax-free, so they’re an extremely efficient way to save. Child Trust Funds are available for people whose children were born between September 2002 and January 2011.

 If your child was born later than January 2011, don’t worry: you can always open a Junior Isa. The two savings vehicles are very similar – both allow you to add up to £3,720 a year to the account, which the child will be able to access when they’re 18, and both are completely tax-free, so you get considerably more out than you would with an ordinary savings account.

 Saving for children What's the best way to do it


The main difference is that Child Trust Funds benefit from government contributions too (although they get less than they used to, after the government announced it was axing the scheme in 2010). However, Junior Isas can be more flexible: you can choose from cash or stocks and shares, which have their own advantages. With a Junior Isa, the child can also manage the account from the age of 16, which can be a great way to teach them about finances – although they still can’t access the money until they’re 18.

 You don’t have to stay with the same provider with a Child Trust Fund or Junior Isa, either. If you’re unhappy with a provider or want a larger choice of investment options, you can always transfer your child’s savings to another at any time – some providers offer ethical fund options, for instance, which can be a good way to introduce children to the world of responsible investment.

 Even if you can’t afford to invest the full amount, it’s still worth setting up a savings account for your child – you never know what the future will bring, and apart from anything else it’s the cheapest way to pay for all the expenses mentioned at the start of this article!

 Brought to you in partnership with Family Investments



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