How To Give Your Kids £1.75 Million: UK

After publishing my article how to give your kids $2million, a reader asked how they would do this in the UK. As I grew up in the UK, I have some understanding of different investment accounts so I can answer his question.

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If you want to give your kids a head start in life and can afford £100 a month then follow this simple path to future wealth.

1 – Open up a Junior ISA. This can be done at most major banks. I like the look of the Fidelity Junior ISA which can be found here. The annual 2017/18 allowance is £4128 which can be either cash or investments.

2- Selecting a Fund. I like the North American Equity Fund. It can be found here. The fee’s are higher than I would like (1.2%), but the growth is tax free so these almost net each other out. You can shop around for better fees.

3- Start investing £100 a month, unlike the US version, Fidelity will let you start with as little as £50.

4- Don’t market time, set it and forget it. Teach your kids what you are doing once they are at an age they can understand. Let’s see what happens at five year intervals.

Year Start balance Invested per year Annual Return End balance
1 £0 £1,200 £0 £1,200
5 £5,368 £1,200 £403 £6,970
10 £14,676 £1,200 £1,101 £16,977
15 £28,039 £1,200 £2,103 £31,342
20 £47,224 £1,200 £3,542 £51,966
25 £74,766 £1,200 £5,607 £81,573
30 £114,306 £1,200 £8,573 £124,079
35 £171,072 £1,200 £12,830 £185,102
40 £252,565 £1,200 £18,942 £272,708
45 £369,560 £1,200 £27,717 £398,477
50 £537,522 £1,200 £40,314 £579,036
55 £778,652 £1,200 £58,399 £838,251
60 £1,124,826 £1,200 £84,362 £1,210,388
65 £1,621,803 £1,200 £121,635 £1,744,638

This is assuming a 7.5% return adjusted for inflation. I used 7.5% as this is the average 30 year return adjusted for inflation between 1980 and 2009 (found here).

So, start your journey with your kids today, they will appreciate it when they hit retirement. Look at the growth in the last 10 years, the earlier you start the more powerful the magic of compounding is. Doing something like this also means YOU don’t need to worry about inheritance and you can enjoy your very own, worry free retirement.

If it’s too late to do this for your kids, then start this for your grandkids! Enjoy the journey of watching it grow.

Good luck!

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