Making regular payments into a CTF or Junior ISA account over the long-term can help build a valuable lump sum for your child – giving them a financial head start when they reach 18.
What’s more, the sooner you start saving for your child the better, as adding a little each month now could really make a difference.
Every little bit helps
Put aside a little a month into your child’s Child Trust Fund (CTF) or Junior ISA account and you could be pleasantly surprised at the lump sum they’ll receive at the end. It’s easy to make regular payments, and will make a perfect gift for a child’s 18th birthday.
Make the most of your child’s tax-free allowance
Junior ISAs and Child Trust Funds are easy, tax-efficient ways for you to invest for your child. And, the great news is that you, your family and friends can now add up to a total of £3,720 a year between you into your child’s account.
Invest more for your child now
The difference adding to a CTF or Junior ISA account could make
As experts in savings and investments for children, we’ve been speaking to parents who’ve told us that they would like to know what difference adding to their child’s account could make and the possible lump sum payout.
So we’ve created the table below which shows you how different regular payment amounts could help build a valuable lump sum over time – in either a CTF or a Junior ISA account.
What their CTF or Junior ISA account could be worth
Possible lump sum payouts at 18
| Direct Debit (DD) contribution | Lump sum payout (based on DD contribution from child’s 1st birthday) | Lump sum payout (based on DD contribution from child’s 5th birthday) | Lump sum payout (based on DD contribution from child’s 10th birthday) |
|---|---|---|---|
| £10 | £3,300 | £2,240 | £1,190 |
| £20 | £6,610 | £4,490 | £2,390 |
| £25 | £8,260 | £5,610 | £2,990 |
| £50 | £16,500 | £11,200 | £5,980 |
| £75 | £24,800 | £16,800 | £8,970 |
| £100 | £33,000 | £22,400 | £11,900 |
| £200 | £66,100 | £44,800 | £23,900 |
| £300 | £99,200 | £67,300 | £35,800 |
| £310 | £102,000 | £69,600 | £37,000 |
For example
If you started paying £50 a month into your child’s account when they reached 5 and continued paying at that rate until they reach 18, then, based on the assumptions below, they could have a lump sum of £11,200 when they reach 18.
The sooner you start saving the better
Based on the example above, if you started investing the same amount from your child’s first birthday, they could have a lump sum of £16,500. So the sooner you start investing for your child’s future the better.
What the information is based on
The table shows what regular monthly amounts paid by Direct Debit throughout the period shown could produce at age 18, assuming a growth rate of 7% a year, and charges of 1.5% of the account’s value each year.
As the account is linked to shares, the figures are only examples and are not guaranteed. The actual value at 18 could be more or less than shown, and could be less than has been paid in. The table does not take into account the Government voucher (for a CTF only) or any amounts that have already been paid in – their value at 18 would be in addition to the figures in the table.
