Saving for Your Child's Future

If you are one of those parents who are concerned about the future of their children, you can now have peace of mind because there are several savings and investment options available for your offspring. Hence, even if he or she is as young as one year old, your baby can have a good start in life by the time that he or she reaches adulthood.

As for your options, one of the best ways for you to save money on your baby is by investing in a cash individual savings account or ISA. Children, like adults, have the same tax allowance of over 6,000 pounds. As long as the savings do not reach this margin, the income will be tax-free. Hence, opening a cash ISA is a sensible thing to do.

On the other hand, if you are searching for a savings scheme that is totally tax-free, you have two excellent options to choose from. One is a child trust fund, and second is a bonus bond from the National Savings and Investments (NS&I).

The child trust fund is a new program available to children born on or after 1 September 2002. This is a long-term savings plan and investment that cannot be withdrawn until the child reaches the age of 18. By setting up the fund, you or anybody can deposit an amount of to 1,200 pounds per year in it. No tax shall be laid against any interest or income earned by the fund.

NS&I's bonus bond scheme for children, on the other hand, works very much like a regular investment. It provides a tax-free interest for kids less than 16 years of age. Furthermore, it gives an additional bonus if the money remains untouched for five years. The bonus bond is supported by the government, making it a safe and profitable way of saving. Hence, if you want to give your child a solid financial start, consider applying for this account now.