According to the government, almost seven million families in the UK are in receipt of Child Benefit payments, which are most commonly paid every four weeks at a rate of £25.60 per week for the eldest or only child, and £16.95 per week for younger children.
Whilst the majority parents receive those payments routinely via a BACS transfer, an investor has revealed a savvy alternative, describing it as “one of the smartest decisions you could make for your child”. Antonia Medlicott, the founder and Managing Director of Investing Insiders, took to TikTok to explain the process in a video.
“Turn your Child Benefit into £45,000 by the time they reach 18,” she began. “You could give them a house deposit, a car or pay for university.” Antonia continued, explaining that over a year you receive £1,331, which could be invested into a Junior ISA.
“If you invested that into a tracker fund earning on average 7% per year, your investment would have grown to £45,000 after 18 years,” she said. “That’s £21,300 in growth from compound returns.”
But how does it work? “Compound interesting does the heavy lifting, Junior ISAs are tax-free so every penny stays invested, and a tracker fund is an easy way to spread rosk globally,” Antonia added. “You don’t need to be a financial wizard to make this happen.”
She closed her advice by recommending opening a Junior ISA as soon as possible and choosing a low cost tracker fund before “letting time and compound interest do the heavy lifting” for you. “Please remember though that all investment carries risk, and 7% returns are not guaranteed.”
The video was met with a mixed reaction, however. One supporter hailed the idea: “Great idea! Honestly we need ours to make ends meet but if I could I definitely would!” A second revealed: “I did this, my son will get 42k in July on his 18th birthday.”
Whilst a third admitted: “I wish I’d known this years ago. That compound interest difference is crazy.”
Others weren’t so impressed though, explaining that amid the ongoing cost of living crisis, saving in this way is simply impoosible for many. “You do realise many family use that money to raise there child,” one parent pointed out.
Antonia responded “I do. This is obviously for the families who are able to pay for their children and the benefit is surplus as it’s not means tested in the same way as Universal Credit.”
A second added: “Maybe ‘spend”‘ and enjoy every single moment with your child rather than ‘save’? Travel to show beauty of this world, buy/enjoy nice and useful things.” Whilst a third asked: “What’s going to pay for the nappies?”
Antonia acknowledged: “Yes, in some circumstances the benefit is needed for the upkeep of the child. But as people’s earning potential changes, this can change and then the benefit can still be used for the child’s benefit.”
