It’s a boy! The new royal baby was welcomed into the world yesterday to much excitement, but what do you buy a baby who has everything?
Kate and William’s new bundle of joy will no doubt be besieged with gifts. Tiny silver rattles and cuddly toys will be flooding in from the nation and beyond. But for those little ones who aren’t third in line to the throne, here are some gift options that last a lifetime…
Affectionately known as Jisas. You may not have the funds to pay the maximum £3,720 in this year, but even if it’s only a couple of hundred pounds, you’re better off benefiting from the tax relief it offers. You can choose between a cash savings junior ISA or stocks and shares. Shares can produce a better return than savings accounts over the long term and you have the option of transferring Junior ISAs from stocks and shares to cash and back again, unlike adult ISAs.
The money will belong to the child and they’ll be able to withdraw it when they are 18. At the age of 16, your child can choose to manage their own account, although they still won’t have access to the money when they are 18. At the age of 18, their Junior ISA will switch into an adult ISA.
Children’s savings accounts
Banks and building societies all offer savings accounts specifically for children, but these are taxed. Only the first £9,440 from savings, earnings and investments is tax free. If you’re unlikely to exceed this limit, you can simply ask the bank for an R85 form so they receive interest without any tax deduction. If you don’t have a large amount to squirrel away immediately, you could set up a standing order to build up a lump sum for them over a few years. But make sure to speak with a financial adviser to open the right account for your resources.
“Forget posh gifts that will gather dust in a cupboard. Nothing beats teaching good habits when it comes to giving a child the best financial start in life.”
A baby pension
Although it sounds a bit bonkers, you could even start a pension for the lucky little one. The government adds 20 per cent in tax relief to pension payments into your child’s plan, effectively boosting payments. You can save up to £3,600 a year into a stakeholder or self-invested personal pension (Sipp) on behalf of a child. The bad news is they can’t access the money until they’re 55, but the good news is that they should see incredible growth in that time.
Forget posh gifts that will gather dust in a cupboard. Nothing beats teaching good habits when it comes to giving a child the best financial start in life. Clearly this won’t start immediately but it can begin when children are very small. Lead by example and speak to a financial adviser to maximise your available funds. Your special little someone may not be royalty but that doesn’t stop you giving him or her the best start in life.
>>> Find out more about saving for children.