From the moment our children are born, the urge to keep them safe and secure is always paramount, and we all want to do what we can for our kids. But even if we give them everything they need as they are growing up, trying to get them on the property ladder when they leave home can still be a leap too far.
As house prices soar and the reluctance of banks to lend to new borrowers doesn’t seem to be resolving itself, the need for parents to support their children in buying their first homes is getting harder and harder. But now that the Government have brought out the new range of tax free ISA’s for Children, it is possible to start saving for any significant investment that your kids are likely to need as soon as they are born. And the sooner you start saving, the more benefit they will receive.
By replacing the Child Trust Fund with this new, more flexible, children’s investment tool, it is possible for parents, families, friends and anyone else connected with the child to make contributions of up to £3,600 a year into a tax free savings account which becomes
accessible to the child as they reach 18.
But unlike the original CTF, there are no limitations on how the individual spends their money, which means that with the right investments during their young lives, your child could have a lump sum of over £100,000 to use as a deposit on a new home as they become an adult. Based on an investment of £300 per month over their childhood and a return of 5%, you can provide your child with a tax free nest egg that will give them the freedom to go out into the world with the support and confidence that every parent would wish to provide.
And as property continues to be one of the most sound investments that an individual can make, creating a savings vehicle that can benefit from complete tax free growth during its entire lifetime and then converting it into a valid and realistic investment for the future, not only provides somewhere for your child to live but can also create the foundation for their own financial stability throughout their lives. And what better way to support your child’s progression from childhood to adulthood than with the purchase of their new home.
But this doesn’t mean you have to kick your children out at 18! The junior ISA can be easily transferred into a standard Individual Savings Account for use when your child is ready or can be used put into any other investment product that is appropriate at the point that the funds become accessible.
Unlike the Child Trust Fund, if your child changes their mind, then the funds are available to them no matter how or when they want to spend them, but you have the confidence and peace of mind to know that you have done everything you can to give your new adult the best possible start.