29 November 2019
Unwrap the festive gift of saving
Christmas is fast approaching, and with it comes the added expenditure that the festive season brings.
Whilst many children will have already started writing their Christmas lists, one idea to consider is a financial gift for your loved one.
Opening a savings plan as a Christmas gift for your child or grandchild now could be the perfect way to build a nest egg that they will thank you for in years to come.
When it comes to saving for children, there are many different options available, depending on your requirements and circumstances.
This plan must be opened by the child’s parents, but once opened, anyone can pay in (including grandparents). The plans tend to be flexible, accepting either regular or ad-hoc deposits such as birthday and Christmas monies. Once the monies are invested, the child can’t get their hands on the funds until they are at least 18.
You can contribute up to £4,368 into a JISA in the current tax year.
Tax Exempt Savings Plan
The Tax Exempt Savings Plan (TESP) is an often overlooked option and provides a tax-free* allowance in addition to the CTF and JISA.
The TESP is only available through friendly societies and provides a guaranteed final return (check with each provider to see what their guarantee is, some providers offer a guarantee of more than you’ll pay in), plus the prospect of annual and final bonuses (if the plan is held to maturity). You can save monthly from £5 to £25 per month for between 10 and 25 years.
TESPs are a great way to save for a child’s future whether that be for university costs, their first car, a special birthday or even a deposit for a house.
Regular Savings Plan
A Regular Savings Plan is another option if you want to save over and above the TESP allowance. Anyone can manage the plan on the child’s behalf and, dependent on the provider, you will receive a guaranteed final amount on maturity, plus possible bonuses.
An Investment Bond could be ideal if you have a lump sum that you would like to invest for a child for a minimum of five years. The bond is open-ended and can be left to run until the child needs the funds, as the proposer of the plan (you) decides when they get the funds.
Start a financial gift they’ll really thank you for this Christmas.
This editorial provides generic information and opinions of the writer and should not be relied upon for making investment decisions. No advice has been provided. If you are in doubt as to whether a savings or investment plan is suitable for you or your child/grandchild, contact a financial adviser for advice, which may incur a fee. Product details vary with provider.