PARENTS who start saving when their babies are born could give their child a nest egg worth thousands of pounds.
Putting money into a junior Isa can help you boost your savings – with just £70 a month turning into £21,000.
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A junior ISA is a tax-free savings account for under 18s where you can save up to £9,000 a year.
As the tax year ends on April 5, you’ve got just over a month to make the most of this year’s tax-free allowance.
If you saved £70 a month over 18 years, your child could get a lump sum of £21,000 when they hit the age limit.
That’s assuming a growth rate of 5% and that you open the account when your child is born.
The figures, which you can work out by using Hargreaves Lansdown’s junior Isa calculator, also account for fees of 1.5%.
The amount you’ll get depends on how long you save and how much you put in each month.
For example, if you saved the full £9,000 a year you could have £228,919 after 18 years.
But that would involve stashing £750 a month into the Isa, which isn’t realistic for many people.
How can I open a junior Isa for my child?
You can get a Junior ISA from a range of banks, building societies, credit unions, friendly societies and stock brokers.
Contact any of these directly for more information about how you can open a Junior ISA with them.
Make sure you compare different options first, to get the savings account that best suits your needs.
You can use a comparison website such as Compare the Market or Moneysupermarket to do this.
Anyone can pay money into a Junior ISA, but the total amount paid in cannot go over £9,000 in the 2021 to 2022 tax year.
The money belongs to your child and cannot be withdrawn until they turn 18.
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