Saving for children – cash options

Saving for children – cash options

Posted on July 3, 2019 at 9am

Saving and investing for children is not so different from investing for any other purpose – you need to determine your time horizon, attitude to risk and to ensure that any saving is undertaken tax-efficiently. There are several options available for those looking to build up a pot of cash for their offspring, some of which are listed below:

Savings and deposit accounts
These are often the first port of call for parents wanting to establish a pattern of saving for their children. Most high street and internet banks have child-specific accounts and online comparison can help you find the best interest rate. These accounts are protected by the Financial Services Compensation Scheme, so there is little risk to capital; however, the purchasing power of the capital sum can be eroded by inflation.

Premium bonds
Premium bonds have been around for generations but are increasingly overlooked as a potential investment for children. A monthly prize draw has awards ranging from £25 to £1m. Prizes are tax-free, but no interest is paid out on your investment. Investors can invest £25 to £50,000. However, the odds of winning are 24,500 to 1 and inflation can erode the capital investment.

National Savings
Products from National Savings & Investments (NS&I) are backed by the Government. They are often tax-free and will pay rates of interest competitive with those of high street banks and building societies.

Children’s savings bonds
Offered by friendly societies, these generally have a maximum investment amount of £25 per month and invest in with-profits funds. The plan must run for at least ten years. You will receive a guaranteed minimum cash sum at the end, plus an amount based on the growth of the original sum; however, the value of these investments can go down as well as up.

Junior ISAs (JISAs)
JISAs allow children to start saving early within a tax-free wrapper. JISAs can hold cash, stocks and shares, or a combination of the two. The savings belong to the child, who can take control of the JISA at the age of 16; however, they can’t withdraw the money until they are 18. Although a JISA can only be opened for a child by a parent or a guardian with parental responsibility, anyone can pay money into the JISA for the child’s benefit.

Everyone’s needs and circumstances are individual to them and the above are just some of the options available for saving for your children. It is therefore important to consider all options and seek independent financial advice from a qualified adviser, such as those at Prosser Knowles to make sure you select the best option for you.

To speak with one of our financial advisers click here to arrange a call back.



Stay in touch

If you would like to keep up to date with current industry trends or receive details of our product developments, seminars, events and newsletters, just fill in your details below.

News Feed

Life Insurance Explained #1

The first in a series of videos explaining some of the different types of insurance policies available in the...

Talking with… Laura Evans

Laura Evans, Financial Planning Consultant at Prosser Knowles Associates Limited, met with Kay Crooke to chat...

What is protection insurance and why do I need it?

As parents, its easy to get carried away by day to day life but it's important to value what we do in order to...

Bank of Mum and Dad facing poverty in retirement!

With young adults now leaving home later and later, loans or gifts from family to help them get on the propert...

Nine million middle aged employees are “flying blind” into retirement

Recently, pensions firm Aviva conducted research into the understanding of finances in later life amongst empl...

Are you, or someone you, know looking to get on the property ladder?

Are you, or someone you know, wondering how to get on to the property ladder? If so, this video is an essenti...

A crucial task that shouldn’t be put off!

All too often, we approach retirement with the hope of many years ahead of us to enjoy holidays, spend time wi...

What is Protection Insurance?

Day to day life can be so hectic and complex even when we are healthy and financially secure. Time passes us b...

Millennials face potential homelessness in retirement

According to the first government report into what will happen to UK millennials who have been unable to get o...

Moved jobs a lot?

If so, you may well have picked up a number of pension pots along the way. Official figures suggest that, in...