With the ongoing cost of living crisis in the UK, saving for the future can seem a daunting task for many.
Yet, one savvy money expert has divulged a clever method on how parents could potentially amass an impressive £40,000 for their child by the time they reach 18 years of age.
Laura Turner, also known as @thriftylondoner on Instagram, regularly imparts her expertise on saving and investing to her 26,000 followers. Her latest post received a wave of attention, with thousands hitting ‘like’ as she elaborated on how to build this substantial nest egg.
Featuring in a reel perusing prams, viewers saw text appear reading: “How to give your baby £40k when they turn 18-years-old.”
Delving into specifics, Laura guided her audience to consider investing the weekly child benefit allowance (£1,331.20 per year) into a Junior Stocks and Shares ISA. According to her calculations, assuming a modest 5.5% average return rate, these investments have the potential to burgeon to £40,973 by the time the child is ready to fly the nest.
Not stopping there, Laura claimed that with a 7% return rate the figures could reach even loftier heights, estimating a total of £48,060.
Her caption reinforced the message, with her saying: “Gifting your little one a £40k nest egg?! Currently the Child Benefit allowance is £25.60 per week (£1,331.20 per year) for your oldest child.”
She detailed the concept further, adding: “If you were to invest that allowance from birth to 18 years old into a Junior Stocks and Shares ISA, that money could grow exponentially.
“Whether you then choose to gift them that money towards university, a first home, a business (or whatever hopes and dreams they have! ). It’s certainly money that will stand them in good stead for the rest of their lives.”
The money influencer continued: “Of course, it goes without saying that it’s not always possible to forgo spending your child benefit allowance. But if you are able to? Investing the allowance is certainly an alternative to consider.”
Laura added a disclaimer to her post, stating: “This is not financial advice. Investments may go down as well as up, and capital is at risk.”
Despite the post receiving over 3,600 likes, many people expressed outrage over the advice. One commenter wrote: “If you can afford to invest money given to you by hardworking taxpayers, you shouldn’t be receiving it. There are plenty of people who don’t receive a penny from the government and aren’t able to invest like this.”
Another commenter added: “Really? How many families over here do you really think can afford to invest their child benefit allowance instead of having to spend it on clothing and feeding their child/children? I’d say an incredibly small amount currently.”
A third commenter agreed, saying: “If you can afford to do that, do you need that from the government?
“Some individuals highlighted that the financial benefits wouldn’t apply to multiple children, with one person, with another person commenting: “It’s a lesser amount for child 2 and then 3. My youngest has missed out on things like £250 free voucher to start a junior ISA. Not fair on him.”
Yet, there are parents who have adopted Laura’s approach, as one mother shared: “This is what we do, we’re only having one child and it works for us. We didn’t until we felt it was affordable, so like you say it’s understandable to not. I’m also in two minds to tell him whether it exists. Will it make him lazy, thinking he has some money on the way, or would it give him time to plan and decide properly what to do?”