If you are looking to save in 2017, you may well be concerned at the current rates being offered by the UK’s leading banks and lenders. After all, many have looked to minimise savings rates while incrementally hiking those that pertain to credit and mortgages, in a bid to increase their revenues in preparation for the UK’s departure from the EU.
A number of high street savings rates have been cut to just 0.01%, for example, while the leading rate on the current market is estimated at a modest 1.1%. While this is troubling enough by itself, it is even more distressing for those of you who are looking to save and invest capital in the name of children.
3 Tips for Building Savings and Investments for Your Children
With this and the challenges associated with saving for your children in 2017 in mind, what practical steps can you take to achieve your financial goals? Consider the following: –
- Consider Your Goals and the Practicalities of Saving in the Current Climate
If you are looking to build wealth on behalf of your children, even the smallest details can make a significant difference. This is particularly true in the current climate, where the differences between associated savings rates and the limitations that are applied to individual accounts impact directly on your future returns.
There is also a huge diversity of savings and investment vehicles available in the modern age, so be sure to appraise each in line with your proposed financial goals, the limitations that exist in terms of deposits and the bottom line savings rate. This will help you to make an informed decision and identify the most suitable options.
- Explore Any Tax Advantages That You May be Able to Access
Aside from these fundamental considerations, you may also be able to benefit from legal tax advantages when investing on behalf of your children. Much depends on your own personal circumstances, of course, but the depth and complexity of taxation laws means that you should always seek advice from an industry expert such as Tilney before making a decision.
In general terms, however, there are several tax advantages that may help you to optimise the amount that you save for your children. It is sometimes more tax-efficient for grandparents to invest on behalf of a child rather than parents themselves, so this is the type of detail that you will need to look for.
- Involve Your Children in the Process of Saving Money
While your main goal may be to help your children build a store of wealth for the future, this means little if they don’t buy into the concept or continue the practice throughout their life. This is why it makes sense for parents and grandparents to immerse their children (or grandchildren) in the process of saving money or making investments.
This can be achieved simply by opening a junior cash ISA, which is targeted at youngsters and can be accessed for as little as £1. Once it has been opened, you can encourage your children to make small but regular deposits, while even paying them money for chores and suggesting that they commit 10% or so to their savings account.
These accounts also have relatively high interest rates, with some offering returns of between 3% and 4%.