Five ways to gift cash to your grandchildren.
Jarrovian Wealth's five Christmas gift ideas that can help get your grandchildren off to a great financial start
Christmas is going to be different this year with no guarantees of who we can meet up with and where we can spend the big day.
This gives grandparents a great excuse to change things around on the gifting front. If the pandemic has shown us anything, it's that having our finances in the best shape and having a savings safety net is vital.
Tony Fields, Chartered Financial Planner at Jarrovian Wealth, says: If you want to give something that won't break or be left collecting dust because youngsters got bored with it you can help to give your grandchildren the very best financial start in life this could be one of the greatest gifts you can ever give.
Here Tony shares five ways to gift cash to your grandchildren.
1. Saving together
Having a goal is one of the best ways to reach it. Families can use services such as Offspring (offspring.co) so they can all chip in to save towards things like university, a house deposit, first car, or wedding. Parents or children can set up an Offspring account, a social savings tool that lets families and friends save together for important occasions, with a contribution page that explains the savings goal. Money is paid directly into a bank or building society account, with no fees or charges on the way. Works for Christmas, birthdays and any other occasions when grandparents, family members and friends give presents.
2.Children's Savings Account
You can open a savings account in your grandchild's name, as long as you have proof of their identity, such as a birth certificate. You can then top this up whenever you wish. Interest on the child's account won't be taxed if the money comes from a grandparent unlike money given by a parent where any interest over £100 a year is taxed, as it was earned by the parent.
Anyone can buy Premium Bonds for a child under the age of 16. They may already have some but that's okay, like an adult they can hold up to £50,000 worth. You can buy online (nsandi.com) or by post and can purchase bonds from the value of £25 per child. You will need to nominate a parent or guardian to manage the money and provide evidence of identity. More/2
4. Junior ISA
Only parents or guardians can open a Junior ISA for a child under the age of 16, but anyone can add to the account once it is opened up to the £9,000 current annual limit. Money grows tax free until the child reaches 18, so they are perfect to help towards university or a first home. The money definitely goes to the child as, once they reach 18, only they can take the money out. The account gets transferred to an adult ISA if they don't withdraw it.
As these investments are typically for the medium to long term, it can be beneficial to invest in a diversified portfolio, which can have a huge impact on the value of the Junior ISA once a child reaches 18. In addition, it can be highly advantageous to drip money into investments on a regular basis when times are uncertain, and Junior ISAs are one of the vehicles which can be utilised to facilitate this.
The Lifetime ISA is for older grandchildren as these can be opened by those aged over 18 but under age 40. If they haven't got one, it's worth persuading your grandchild to open one, then you can gift money to save into the account. Money can be used for a house deposit or left until the age of 60 for retirement savings. It gets a very generous 25% government bonus added. A maximum of £4,000 a year can be saved, until the age of 50, with a maximum £1,000 bonus per year.
Yes, you can start saving towards your grandchild's retirement via a Junior SIPP, (Self-Invested Personal Pension) from just after they are born. With all the changes to pensions and many people not ending up with a decent pot to see them comfortably through retirement, the earlier people get started saving for their older age, the better. You get a tax top up on Junior SIPPs. For every £1 you invest, the government will add another 25p. You can put away up to £2,880 every tax year, boosted by up to £720 in tax relief to £3,600. These types of long-term savings can be opened from as little as £25 a month.
Tony Fields added We all know how hard this year has been, and this is no different for young people, and so what better way to put a smile on your loved ones faces, than to set them on a solid financial path for the future.
Note to Editors:
*You must not rely on the above as investment advice based on your personal circumstances, nor as a recommendation to enter into any of the services or invest in any of the products listed above. The value of investments and the outcome from them can decline, you may not get back what you invest. Where you are unclear as to the meaning of any of the above disclosures or warnings, we would strongly recommend that you seek independent legal or financial advice.
About Jarrovian Wealth
JW was established in 2017. Our team of skilled and experienced financial planners does more than just look after the numbers for clients around pensions, investments and protection – both personal and business. We get to know and understand the deeper motivations and aspirations, so we can challenge people to think bigger. While knowing they are in a safe pair of hands building up a secure financial future. We may be one of the newer players, but we are packed with experience as our clients have been trusting our experts with their financial lives for over 30 years. We don't just focus on individuals we incubate businesses too helping entrepreneurs and those up and running to get ventures off the ground, stay on track and plan the perfect exit strategy, so owners can focus on the day job of running the show. JW's headquarters are in London.
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10th November 2020