Investing for our children's future...decisions!(6 Posts)
The wife is due to give birth late April/early May to our first child and I wanted to ask what all the parents do with regards to savings for when they are older.
So the situation is this. We both work full time and earn over the threshold to receive any sort of child benefit from the government. We both work for the same company and both put into shares, although these don't make a massive amount, but a few thousand every few years helps.
Over the past 7 years we've managed to be rather frugal with our money and have been able to purchase 4 properties, one of which we live in ourselves and the rest we rent out. The aim would be to try and pay them all off within the next 20 years, though we have yet to decide whether these will be passed onto our child to carry on renting or we sell and have towards our retirement.
I've been looking online and found a few options with regards to savings. Annoyingly the child trust fund stopped in 2011, though they now have junior ISA's in it's place or do I go for something long term like a stakeholder pension for our child?
What do you all think would be the best option to consider given our circumstances?
What would you and "the wife" like to see happen? What financial position would you like your child(ren) to be in at age 18/23/30/40/50/60/70?
It strikes me that you would appear reasonably knowledgeable already with financial planning so why don't you apply the same principles for short/medium/long term considerations for your offspring.
I think 4 houses would be enough for one offspring. If you want to do more I woudl go for the a junior Isa as it has the tax saving wrapper. We don't save for our kids. if there is anything left when we die they can have it other than that I woudl hope they would get jobs when they are older.
Ours have premium bonds which they have had access to from their 16th birthday (still untouched!).
A house deposit each which is in our names until they need it.
We also have properties, including a holiday home that we rent out that they will benefit from.
The holiday home especially beneficial as it means they get free holidays and DD can help us clean it to earn money whilst she is still studying. We have definitely bought them with a view to passing them on.
DS will be paying into his own pension soon so he can sort that himself as we are planning/funding our own early retirement for now.
You've already made a very good start!
As Sunseed said - what are you aiming for?
My child has a CTF, which we put £100/mth into since birth (the max then), didn't increase it when that increased (now £340/mth I think) as it seemed like far too much money to get at 18. He now has approx. £20K in savings in his own name at 12...so I guess that will be nearer £30K at 18.
Our motivations were that we wanted our child to have what we had at 18/25/30 with no/very little help from family at all. I got a full grant for uni & very modest student loans by today's standards. I was given £100 for fresher's week and that was the last of the financial help from my parents. DH left home at 18 and was given about £50 worth of shopping. We were both able to purchase our first homes in our early-mid twenties. I paid my student loans off by my late twenties. We weren't on amazing wages either in our early/mid twenties.
Anyway, apart from the £100/mth in DC's name, we save money in our own names (and we expect a good proportion of that to go to DC in the future). Got our own financial house in order - paid off the mortgage as soon as we could, increased our pension pots (and ensured that they could be inherited in full), saved/invested in our own names. Now that the ISA allowance is £20K/yr each - we're not maxing our allowance so not really that bothered about putting more in DC's name (plus don't think that is a good idea - unless it is a pension).
We have had angst about buying property too but came to the conclusion that we would find it far too stressful - in many ways. We're doing enough - the motivation is not to make him a millionaire by 25! Just to be able to buy a house, not be saddled with debt and ultimately to have the option of retiring nearer to 60 that 70. Like what we had.
Ah - just noticed that this thread is several weeks old!
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