Parents are being encouraged to invest wisely for the long term future of their children by seeking out the best high interest rate savings accounts. Research conducted by the Halifax has shown that, on average, children gain around £1,383.20 each year from a variety of sources. 9% of children have part time jobs whilst others receive gifts from grandparents or are paid for completing household chores. By far the single most popular way for children to earn extra cash is through completing a paper round.
The research shows that 1/3rd of children save for a special 'something' but the Halifax advises parents to help this grow by using a short term high interest savings account.
The Halifax commends the savings habit already being instilled in some of the youngsters today. They believe that this will stand youngsters in good stead for later life.
Whilst there are many children's savings accounts available, many including a range of freebies to encourage take up, long term savings plans focus around the government sponsored Child Trust Fund programme. This scheme provides all children born on or after September 1st 2002 with a voucher worth £250 (£500 for children from low income homes) to be invested until the child reaches 18. A further £250 (£500) voucher is available at age 7 and parents, family, friends or the child themselves can add an additional £1,200 per year to help the fund grow.
Whilst not suitable for short term savings (the account fund cannot be accessed until the child is 18), a Child Trust Fund is a tax efficient long term savings plan that helps teach children the value of investing for the future. There are a wide range of providers and options between investment types from shares and bonds to funds and cash. Changing between fund managers is an easy and straightforward process that enables parents to stay on top of getting the optimal return for their child.
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