Savings bonds for children

Setting aside money for our future is an important consideration, especially with the economic uncertainty that lies ahead. Savings bonds for children is an even more crucial financial step to take. There are many ways to begin nurturing that critical nest egg, and the best way is to consider some alternatives.

Options for savings bonds

If you go online and dip into some of the websites offering savings bonds for children, you’ll get a sense of the scope of investment plans on offer. Scottish Friendly offer a Child Bond which is a tax-free with-profits pan, running for a minimum period of 10 years. This can be taken out on any child under the age of 16, and allows an investment of £10-25 per month. This bond will invest in the Scottish Friendly With-Profits Fund, which is managed over a range of assets, including stockmarket bonds, property and cash.

At the end of the term you have selected, the child in question will receive a guaranteed minimum cash sum. This amount can keep growing, through the regular addition of bonuses. The sum might also increase by a final bonus related to the investment performance of the Fund. Because schemes such as this ensure that no profits are paid out to City shareholders, excess funds can be reinvested for the benefit of Scottish Friendly customers. The bond is always the property of the child, and automatically includes a small amount of life insurance cover as an automatic condition of the tax benefits.

There are many bonds which operate along similar lines, aimed at using resources from the financial markets to boost the savings opportunities for young people. Lloyds TSB have a Young Savers option with a minimal initial deposit of £1.

Saving for University

While many savings bonds for children are a straightforward investment aimed at generating a long-term windfall, others are specifically aiming towards certain events. For instance, Shepherds Friendly provide a University Savings Plan which allows you to invest up to £200 a month towards a child’s education. This must be opened between birth and the child’s 11th birthday. When they reach 18 they receive a tax-free lump sum. This can also be withdrawn in stages during their university course.

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