WHEN A CHILD IS BORN
A new baby in the family at Christmas is exciting, so here’s how you can help save for your grandchild’s financial future…
As a grandparent, you’re bound to want to buy presents, especially for that first special Christmas. I can clearly remember some of the toys my mum and dad bought my daughter for her first Christmas, but they also star ted a savings account for her too, paying some money in on both bir thdays and Christmasses to give all their grandchildren a little nest egg by the time they reached 18. So if this Christmas brings a new baby into your house, what’s the best way to save for their future? Junior ISA
Banks and building societies offer these and there’s two options – a cash version or a shares based one where money goes into the stockmarket.
Only parents or legal guardians can open one, but once open anyone, including grandparents, can pay in. During the current tax year, which runs to April, the limit is £9,000 a year. Interest or profit is tax free and the money can’t be touched until the child turns 18.
Savings accounts
There’s plenty of kids’ savings accounts out there but rates and rules do differ. Some smaller building societies may have better options.
The Shepherds Friendly Society has a Young Saver plan which runs for a minimum of ten years. Grandparents can pay in from £7.50 to £100 a month. Money is invested in the stock market, which can mean higher returns than cash savings over time. The account comes with a built in sickness benefit paying up to £400 a week if the child is off school with a long term sickness.
Cash savings options include opening a Regular Saver. The top rates right now are with Halifax, paying 4% a year. You can save from £10 up to £100 a month. Barclays is just a tad behind, paying 3.5% a year with monthly savings from £5 to £100.
Both these accounts last one year, so you’ll need to reinvest or switch the money as rates usually plummet after any initial saving term ends. If you’re not the parent, you’ll need their permission to open one of these accounts.