How to make your child a millionaire by the time they are 64 from just £60 per week

But for most mums and dads it can also be a time of financial pressure and uncertainty.

 

Fortunately, you don't need a royal fortune to set your children on course for their first million when they are still in nappies.

The key is to get the whole family involved, make use of government tax perks, not just rely on cash, keep charges down and ultimately ensure you raise a diligent saver to continue the savings habit from age 18.

We take a look at the options and how long it will take you to build up a million pounds, in theory. Here is where to start.

Start saving into a pension from birth

Many won’t start retirement saving until they enter the workplace, so opening a pension – typically a junior self-invested personal pension or stakeholder product – before your child can even walk or talk will put their money to work in the stock market early.

Up to £2,880 can be saved tax-free each year, and the government tops this up by 25 per cent, transforming it to £3,600.

This works out at £60 a week or £260 a month which is effectively boosted to £300 by the government.

Invest this each month, and investment provider Fidelity International says, assuming annual growth of 5 per cent, a 0.75 per cent annual management fee and 0.35 per cent platform charge, the pension pot could be worth a hefty £1MILLION by the age of 64.

This also depends on the child continuing contributions once ownership transfers to them at age 18.

Pensions can’t be accessed until a minimum age of 55, and this may change as people live longer.

This isn’t the only product that could help make a millionaire though. There are lots of other options to help parents give their children a healthy financial start.

Parents can save up to £4,128 per year into a Junior Isa

A Junior Isa (Jisa) lets parents save up to £4,128 a year in a tax-free savings account that can be accessed by their child from age 18.

That may seem like a lot of money but it works out at £79.38 a week, so could be achievable with the help of family and some determined saving.

Similar to an adult Isa, a Jisa can be held in cash or stocks and shares.

Returns are typically better when investing as you benefit from the power of compound interest by reinvesting how much you receive each year.

Saving into a cash Isa paying 3.25 per cent would leave your 18 year old with a pot worth £23,259, but if it was invested in the stock market, assuming annual growth of 5 per cent, after fees, it could be worth £27,719.

The tricky bit is getting your child to continue once they turn 18, when they could effectively blow the lot.

There are apps that help create a savings habit such as Moneybox, which rounds up purchases such as the price of a cup of coffee and invests the change, or pocket money tracker RoosterMoney.

Fidelity International figures show they would need to continue investing £344 a month to reach millionaire status by age 61.

Maike Currie, investment director for personal investing at investment provider Fidelity International, said: “Considering one in three babies born today are expected to reach age 100 – it means they’ll have at least 40 years to enjoy the dosh.”

They could reach this goal sooner by saving more but obviously there will be other expenses such as saving for a house deposit.

Get grandparents and other family members involved

You don’t have to work alone on making your child a millionaire.

Everyone has a £3,000 "gift allowance" a year, which allows parents, grandparents and friends to give money away without it incurring inheritance tax as long as they live for seven years from gifting the cash.

On top of the Jisa and pension, you could encourage family members to make use of this.

Sarah Coles, personal finance analyst for Hargreaves Lansdown, says you could reduce the clutter of toys around the house by asking for birthday and Christmas presents that help towards your savings goal.

Premium bonds – invest up to £50,000

Parents, legal guardians, grandparents and great-grandparents can invest between £100 and £50,000 into this government-backed savings product run by NS&I.

Account holders are entered into monthly draws for cash prizes of up to £1million as well.


ROYAL BABY Meghan Markle is expecting her and Prince Harry's first child in the Spring of next year


But, as Adrian Lowcock, investment director for Architas, warns, there are no shortcuts to becoming a millionaire.

He said: “No one becomes a millionaire, except lottery winners, from a one-off investment unless they already have a lot of money to start with.

“So it is about starting small and adding regular amounts each month to help it grow.”



Source: Read Full Article