Newspaper article The Evening Standard (London, England)

Never Too Soon to Save; Samantha Cleasby Invests a Monthly Amount5 for Her Children- Charlie ( Left) Seven, Ellie, Four, and Thom, Two

Newspaper article The Evening Standard (London, England)

Never Too Soon to Save; Samantha Cleasby Invests a Monthly Amount5 for Her Children- Charlie ( Left) Seven, Ellie, Four, and Thom, Two

Article excerpt

Byline: Lorna Bourke

THIS Christmas, children will receive an estimated [pounds sterling]800 million inmoney, with about 78 per cent picking up an average of [pounds sterling]85 in cash.

According to The Children's Mutual, one of the largest Child Trust Fund (CTF)providers, almost a third of parents allow their children to blow their gift onwhat they like, while another 30 per cent try to persuade their offspring tosave.

"Even if a small proportion of this were put into a CTF account, it could helpdeliver a significant financial springboard into adulthood," said David Whiteof The Children's Mutual.

Savings accounts

If you want to make sure that your gift is not frittered away by the childor raided by the parentsthe Halifax Children's Regular Saver account paying 10 per cent, is the bestdeal. Minimum investment is [pounds sterling]10 a month with a maximum of [pounds sterling]100. The drawback isthat the high rate only lasts for a year.

Accounts can be opened in your own name on behalf of a child and are limited toone account per adult. So you need to check with the parents whether the childalready has an account.

This is a good account for teaching a child how to manage their money. From theage of seven the child can go into any Halifax high-street branch and pay inand withdraw cash using their own signature. For more information, call 0845726 3646, or visit www.halifax.co.uk.

The next best account is Nottingham Building Society's Children's RegularSaver, which pays 7.5 per cent. The rate is fixed annually for a year but moneycan be withdrawn at any time. Minimum investment is [pounds sterling]10 a month and the maximumis [pounds sterling]100 a month. To check the best buys for children's accounts, visitwww.moneyfacts.co.uk or www.moneysupermarket.com.

Child Trust Funds

A CTF is the best place to invest for children under the age of five as themoney rolls up taxfree and cannot be withdrawn until the child is 18. At thatpoint it can be rolled over into an Isa and the money continues to accumulatetax-free. Up to [pounds sterling]1,200 a year can be invested, plus the [pounds sterling]250 or [pounds sterling]500 governmentvouchers.

CTFs come in two types: cash and equity-based. The vast majority of parentsinvest CTF vouchers in cash funds. But given that this is a long-terminvestment, it makes better sense to go for an equity-based fund, which shouldshow a better return.

However, it is always worthwhile remembering the joys of compound interest. Ata return of seven per cent, your money doubles every 10 years.

The best return available by post and at the branches is fromLoughborough-based Shepshed Building Society, which is paying 7.25 per cent.For more information, call 01509 822000, or visit www.theshepshed. …

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