I want to help my younger children to understand the concept of making money from money rather than working or should I say as well as working.
It is very easy for kids to get money, from relatives and birthdays etc, but I want them to see how things can grow disproportionately to other savings schemes.
Now I will tend to take higher risks, as the thought is the kids wont really miss the money if they don’t get it in 5 or 10 years times. But as they are my kids I don’t want to waste or frivolously “invest” it in dodgy places. So I need to set some rules that can always be amended.
First I need to set the rule :
Only invest in something I would invest my own money in
Always try and protect the capital sum.
Spread the risk over a few types of investments or companies.
So firstly, the kids have just over £1200 in building society’s etc. So the first simple no brainer is to take out an annual Regular savers account with the Halifax. Simple 6% interest on investment over 1 year with regular £100 monthly payments into it.So each month draw £100 out of building Soc and pay into Halifax account. Now it doesn’t actually work like that, with me, as I have an account set up to pay by standing order, so every 3 months or so, I draw money from the Building soc accounts and put in the “standing order” account ready for onward transmission. So with this, at the end of the year the kids get £1200 plus about £36 interest paid back to them and then the account starts all over again.
Now my slightly bigger kids have a lot more money, and unfortunately Halifax only allow one account of regular savings per child. So… actually it works out better.
NB This following scheme has now been withdrawn, but keep an eye on the company they will come back with something really good – and no I dont have anything to do with them
There is a very interesting scheme, out there, or rather Here. At this stage I must issue a few points I’d like to draw your attention to. I have nothing to do with this company, I have no financial interest in this company, although I do invest my money with them. But the biggest testimonial I can give them is they do do what they say, in that the money does come back to you.
So what involvement do my kids money have with this organisation. Each of the children have between £500 and £1500 invested in the “Ant Fund”. This pays them a staggering 7% guaranteed fixed interest for the 12 month period. But remember, this is an unsecured loan to the company, and you will be right at the end of a long line of creditors if they go under.
At this stage, the kids probably have £2000- £3000 invested or saved, so now you can start to look at real life options too. Don’t forget they can earn over £10,000 before they need to worry about tax, so you need to look at tax free investments/schemes to make the best of everything. How much does a gopro camera cost.. combine this with an interesting child, a you tube channel and some exciting locations… and you can end up like Jake Mitchell! Or perhaps buy a second hand bucket and sponge.. car washing!! Lawnmower – grass cutting! Thick gloves – gardening.
A small issue you may experience here is kids don’t like to work for money now, but if you can over come this objection you will stand them in great sted for the future