Popular Facebook account Up the Gains, which boasts 141,000 followers, shared the moneyp-saving method on their page, calling it a ‘game changer’ for people who had kids
Most parents try to save a little bit of money when they can to help their child or children in the future, and one money expert has now shared his method to gift children a whopping £100,000 when they turn 18.
Popular Facebook account Up the Gains, which boasts 141,000 followers, shared the method on their page, calling it a “game changer” for people who have kids. They wrote: “The magic of compound interest = life-changing money for your child.” The first step of the method was to open a Junior Stocks & Shares ISA and then they said you should contribute £210 a month to it.
That would meant that the total you’ve invested over the 18 years is £45,360.
They wrote: “At 8% average net returns, [that’s] £100,818 when they turn 18. That’s £55,459 in tax-free compound growth.”
The account suggested that the £100,000 could be used for university, a house deposit or a business start-up.
They also stated that it’s not just parents that can contribute to a child’s Junior ISA, but grandparents, friends and family too. A warning was shared not to exceed the annual £9,000 limit though.
Other warnings included that 8% returns isn’t guaranteed as the markets “go up and down”, however they wrote: “Historically, global index funds have averaged 8-10% annually over long periods.”
They stated that even at 6% returns, £210 a month would bag you £81,000 at 18.
Despite the post racking up hundreds of likes, many people commented saying they wouldn’t be able to afford to contribute £210 a month.
One person wrote: “Great idea. Sadly not many of us can afford to put £210 to one side every month. And double that if we have 2 kids. Looks great on paper.”
While another echoed: “Not that easy when you have four kids.”
Answering this, Up the Gains replied: “Don’t get caught up on the numbers, it’s just an example. If you can’t do £200 do £100. If you can’t do £100 do £50. If you can’t do £50 do £20.
“The important thing is to do something because no matter how much you invest, compounding can make your money turn into a much bigger total than what you contributed.
“The most important things are consistency and time, and you don’t get a second chance to start early.”
One fan added: “Yep! JISA is the way to go. Whatever amount you can afford to invest per month, it’s going to do better than other types of savings accounts.”
What happens to a Junior Stocks & Shares ISA when your child turns 18?
When your child turns 18, the Junior ISA automatically becomes an adult ISA. The child will then control it completely and they can withdraw or keep investing into it.
