Regular readers of my blog will know that I am nervous about a lot of things about my daughter’s future….and a biggie is her financial security. The prospect of all those future costs – eek! – driving lessons, university fees, weddings….is enough to make anyone’s brain fall out of their ear.
But it doesn’t have to be that way. And so I’ve teamed up with Orbis Access to provide some tips on how you can save for your child, so you can ensure your brain stays firmly on the right side of your ear:
Don’t be put off
Future costs can seem incredibly daunting but don’t be put off. Even a small effort can have a significant effect and although you might not be able to cover all of their costs, anything you are able to do will help them make a start out there on their own.
Think little and often
Gone are the days it seems when anyone had a large amount of money to splash around. We are living in frugal times, and so with that in mind, investing a small, regular amount each month is a more comfortable option. Putting something away for your child on a regular basis will let you get used to the money leaving your account each month rather than the pain of having to scratch around for a lump sum you don’t have at the end of the year.
Think in terms of compounding
Compound-what? Compounding is the ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings and apparently the biggest brain of the universe Albert Einstein once called it “the the most powerful force in the universe”. But what has this got to do with you? Compounding is all about investing and then reinvesting the returns, and then reinvesting the returns THOSE returns make. You get the picture? Obviously, you need to be in it to win it, and by going down the little and often route, this is a potential way to slowly spin up the money you are saving away for your child/children.
You know what they say….there’s no time like the present! The earlier you get started, the more your money can grow. Don’t make excuses about needing a larger amount to get your started, because quite simply….you don’t!
Learn about investing
If you’re feeling totally overwhelmed by it all, get back to basics and learn about investing. Immerse yourself a little first, and then think about what you want to do next. The Learn About Investing section of the Orbis Access website is a good place to start.
Don’t underestimate the power of £100. Here’s a little case in point:
Let’s go we back to the end of the last century. Remember that? A time when we were worried about the Millennium Bug, Britney Spears topped the charts and 9/11 hadn’t happened, let alone Brexit or President-elect Trump.
Imagine that a parent was able to open an Orbis Access Junior Isa with £100 and enjoyed our ‘£100 match’ Christmas offer. Their Global Equity Fund wasn’t available in the UK at the time, but the same investment strategy was in existence (and available to some investors outside the UK).
Then match it
Let’s also assume that the parent had received a matched investment amount of £100 from Orbis Access when they opened the account (more about that in a moment).
Then keep it going
This is what would have happened if, once a year that parent had invested £100 into their Orbis Global Equity Strategy in their account at the end of each year*. If they had kept this routine up, on the last day of 2006, the year in which the child turned 8, the value of the investments in their Junior ISA would have been worth nearly £1,900.
A decade later in November 2016 – just as their Junior ISA matured into an adult ISA – it would have topped £7,400. It might not be an earth-shattering amount, but it would be enough, say, to pay for driving lessons and a decent first car.
* Assumptions: The child was born in 1998 and their Junior ISA was opened on the last day of that year. By November 2016, 18 payments of £100 were made (plus an extra £100 from Orbis Access on 31 Nov 1998). Adjustments have been made to reflect differing currency rates and fees.
Please remember that your capital is at risk when it is invested.
Here’s how it works
And now for the good bit! The lovely folks over at Orbis Access will be matching the first contribution of £100 into any new Junior ISA accounts opened between 15th March up until 30 April 2017.
They’ll do this for each new account so you can benefit from the offer more than once if you open more than one Junior ISA. To make use of this offer, here’s what you need to do:
- Open a new Junior ISA account with them here.
- Invest any amount you’d like into the fund or funds of your choice by April 30th- by investing a single lump sum (which could be from ISAs or Junior ISAs transferred in) or by setting up a monthly plan.
- They’ll match your investment, up to £100 per account (you can open more than one account). This will be invested into the fund of your choice after May 1st 2017 and must be kept invested in one of our funds for three years or more.
Don’t forget, if you also happen to win the amazing prize draw I have been running with Orbis Access to win £300, then by investing a further £100 under this matching offer – that could potentially take the total give-away to £400. Just think of the car that could buy them by the time it’s matured!
If you haven’t already entered the prize draw to win a £300 contribution to a Junior ISA account enter here otherwise apply here to set up your Junior ISA account to qualify for the £100 matching offer.
*This post is in collaboration and is approved for issue in the United Kingdom by Orbis Access (UK) Limited which is authorised and regulated by the Financial Conduct Authority.
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The post Little and often: Top tips on saving for your child with Orbis Access appeared first on Motherhood: The Real Deal.