How much do you save for your DC?

[Chocolattcoffeecup]

How much are you saving for your DC and how are you saving it?

Ours have just under £50k each in a "linked" account, so it's held for them but they can't access.

We recently reduced the amount we were saving for them, from.£150 to £45 a month as we feel they have a decent sum building now (they are in primary so it will grow).

Ours were extremely lucky - they each inherited £250,000 from dh’s aunt a number of years ago. We stopped saving for them at that point.

£25 a month in a shares-based CTF (15 yo) / JISA (12 yo). They will have full access and control of it when they reach 18. Did the same for all my DC. My 2 older DC have reached 18 and haven’t blown it yet so hopefully the younger two will be sensible too.

Junior ISA for one-off gifts, inheritance etc. we don’t regularly add to this but it’s growing nicely. Junior SIPP, I put £24pm in since birth which should get her pension off to a good start by the time she’s 18.

£40/month per child, not loads but what we can afford right now with three small children. I'm hoping for around £10k each by the time they're 18. Currently they're just in children's savings account so watching this thread for any tips as I'm sure we could be getting a better return.

We were trying to save £1,000 a year per child but it became too much when we had a third. Ended up deciding to save £10,000 by the time they're 10 and let some compound interest do the rest. DD is now 10 and has £10,000. It will be about £13k by the time she is 18. I'm hoping it teaches my kids about the importance of compound interest as I was never taught it. My younger two have around £5/6k at the moment but they will both be at £10k by the time they get 10. These are just in a junior ISA, they also have a S&S ISA that their grandparents put birthday (£100) and Christmas (£50) money in.

Nothing but I've just finished paying his private school fees.
I also paid for his training course so he could get a lifeguard job and I'll pay his uni accommodation. He'll have a year's wages in the bank by September to live on.
We'll deal with his other uni costs between us - I expect him to get a job when there but will make sure he's OK.

By the time he needs a house deposit, I'll have saved some more. Or I'll drop dead from exhaustion and he will inherit mine 😁

I honestly don’t know anyone who saved for their DC like this.

I had managed to save up £50k for each of my 3 so that they could get on the housing ladder, which they all have now. I started from birth and put it in premium bonds.

We've never saved as such but put lump sums into their savings periodically, currently at around £90k each but we'll pay for university costs and they've always known this money is intended for a house deposit. Oldest is 18 now and hasn't touched it and doesn't want to.

saving for adulting (uni, drivers license) not directly accessible to them.

Very little - I would have absolutely blown a lump sum at 18, so no way would I risk my DDs getting access to a large lump sum.

Unless you’ve maxed out your own (and the other parent’s) ISA allowance each year, why would you take the risk?

@HP87 turning £10k into £13k in 8 years isn’t a lesson about the wonders of compound interest, it is a lesson about the dangers of inflation and not getting the best returns! If inflation is 3% a year the £10k’s value in 8 years’ time is £12,667. If you’ve grown it to £13k you’ve barely maintained its spending power. Investing it in a low cost tracker would
likely produce better returns and be a much better lesson about risk and reward.

Same.. I think it’s a privileged few who get to do this.

We don’t save anything. We have however paid off our mortgage at a young ish age and assume that - all being well (and it may not be, I have complex disabilities) that dc will inherit this in the future. We spend a lot on holidays and experiences rather than saving.

£10/week into a junior ISA since they were born, plus £5000 my grandmother gave them when they were toddlers. So should have around £15k by the time they're 18.

Thank you @SlipperyLizard .i do understand what you're saying but I was taught nothing about interest on savings, investments etc so it is absolutely more than what I learnt. They do also have stocks and shares ISAs so will be able to be shown the difference, maybe that makes it better to see a clear comparison, who knows. But what I do know is they won't be getting takeaways pretty much all weekend every weekend like I did.

Once the younger two have hit the amount they need to to be at £10,000 by 10, if we are able to then we will be saving separately for them for when they are older (so they don't get it at 18) and that will all go into stocks & shares. DH is using trading 212 at the moment and is learning everything there is to know.

For those with the means, please consider starting a SIPP (Self-Invested Pension Plan) for your child / grandchild. You can pay in £2880 a year and the government add £720 free money (who doesn't like free money?).

It can't be touched or extorted until retirement at 58+.

You can select any investments you wish. We use a Golden Butterfly portfolio but we're happy to "manage" the portfolio. Others may just choose to invest it all All World Shares Fund that invests in 4000+ companies around the world. No need to worry about companies going bust or missing out on new companies that rise up to take over the world. They are all covered.

So, the bottom line, what may they accumulate? Who knows, but an above inflation return of 7.5% pa isn't completely unreasonable (we made over 20% last year). Calculators out. Key in 1.075. Look for the "power" key - the one with the x and a square box superscript. Enter the number of years until their potential retirement - 58 for a new born. Press equal sign. Now multiply by £3600 (2880 + 720). You'll be looking at £238K in the pension in today's money when they retire - all from one single lifetime payment - nothing else ever required. Now consider what another payment next year could add. Or what a better return like 10% pa may achieve (1.1).

Both have projected pensions from birth around the £300k mark. I have house deposits for both (can afford £100k each but hoping it’ll be less) and they’ll each get a car at 17.

They’ll also inherit three detached houses between them. I can do no more.

How do you get those figures? I’ve done some online calculations and get nothing like those potential results. Just from a one-off 2,880?

The actual calculation is 3600 x 1.075 ^ 58 = 238777.5146.

Where I have put the ^ sign, you need to find the key on the calculator that shows x with a white square to the top right of it.

Let me know if that helps or not. Otherwise I'll try to do some screenshots to help make it clearer. Cheers

Try this

That x-square key is the one just above the "sin" key.

Enter 3600, then "X" sign, then 1.075, then that x key, then 58 (and you should see what is shown in the picture. Then hit the "=" key for the answer.

If you want to model 10% returns then change 1.075 to 1.1. If you want to model a different retirement time say, age 68 for a new born, then change 58 to 68.

Good luck.

A back-of-fag packet approach is to use the Rule of 72 which holds that a rate of return divided into 72 gives the number of years your money takes to double.

If you use 7.2% as the annual growth, the investment doubles every ten years. This is actually below the long term average return from the stockmarket, but it's useful for illustration.

You put £2880 in now. The tax man adds another £720 in a month or two, making £3600 for the year.

In 10 years, that would be worth £7,200.
In 20 years, it would be worth £14,400.
In 30 years, it's will have doubled again to £28,800.
In 40 years, it's £57,600.
In 50 years, the point at which someone in English primary school Year 3 now would be able to access it under current rules, that one off £2,880 is worth £115,200.

For children, the one thing saving now really does have going for them is time and with the power of compounding (once described as the eighth wonder of the world) even small amounts now become enormous in 50 years.

I put £100 a month into an ISA. It's not loads, but it's what we can afford.

When she's 18, I will tell her about it and she can choose to have access to it then and I will stop adding to it, or leave it where it is and I'll continue to make contributions until she's 25.

Dd has about 20k in one account then dh and I save separately for her in an ISA. We both put in £50 each per month and have done since she was small (now a teen). We have other investments and savings that we plan to use to help with buying her a car, uni fees and house deposit.

For you, and others like you, definitely consider taking out £2880 from that pot and setting up a SIPP. The earlier the better.

I don't save anything for my children because it makes more sense to me to use tax-efficient savings and investments in my own name (and my partner's). They have JISAs because their grandparents like to put money in there sometimes, but I don't systematically add to them.

I'm not really convinced about children's pensions - I do get the 'long time to compound' argument, but shorter term I can get better tax relief by adding any spare money to my own pension, and there's more flexibility about how and when I can use that money to benefit my children.