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Saving for kids: how to start building a nest egg for your child

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theguardian.com

With enough time, and some luck, even small sums saved on behalf of a child will amount to a tidy fund to be put towards their future.If you put £25 a month into a savings account paying 2.45% from a child’s birth until they turned 18, they would have £6,775 by the time they reached adulthood, according to savings tracking website SavingsChampion.co.uk.Alternatively, if you invested £25 a month into a stock market-linked account, and it grew by 4% a year after charges, they would end up with £8,000 when they reached adulthood, according to the investment provider AJ Bell.“While some of the recent market falls may have put parents off investing for their children, this could be an opportunity to make long-term gains,” says Laura Suter, head of personal finance at AJ Bell.Every child can have up to £9,000 saved into a junior Isa (Jisa) on their behalf each tax year.There is no capital gains or income tax to pay on these accounts, and you can choose whether to save in cash, stocks and shares, or a mix of both if you wish.

The child’s parent or legal guardian can open a Jisa, but anyone is able to contribute to it, such as family friends or relatives.Children aged 16 or over can apply for an adult cash Isa, and save up to £20,000 in it this tax year.However, they can’t invest in a stocks and shares Isa until they’re 18.

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