How Investing Now Can Make Your Child a Millionaire|Junior ISA | SIPP

Once you invest in it, your returns, whether from interest or investments, are completely tax free. All the returns, whether dividends or capital growth, savings investment returns, are entirely tax free. Imagine a family of four. That's a whole £58,000 ISA allowance for you. The money cannot be touched. They cannot assess it until the child turns 57. Starting this early could set up your chart for life. Make sure the platform aligns with your own financial goals. What if you could give your child the chance to become a millionaire by the time they are 18? Wait, I'm not talking about winning a game show or hitting the lottery. This is not about who wants to be a millionaire. This is something more practical and within your reach. And this is by simply investing smartly today, especially with Tax Advantage account. Is that something you would want? Well, if that's something you're interested in, let's have a look. Now, it might sound like a big dream, but even if a cool million is not your goal, you can still give your child a huge financial head start. And whether he's avoiding student debt or buying their first home, or just building a strong financial safety net, I'll show you exactly how. From my experience and with some powerful investment strategies now, Whether it's from junior ISAs to junior SIPs and even real estate, we'll break down the three main options that you can look at that can make this possible while still taking fewer risk. Now, if you stick around to the end, I think you want to do that because I've got a special gift for you. It's a guide to help you navigate confusing investing jargon that beginners often face that put them off investing because they don't think to understand what's really going on. So let's dive in. If you're new here, I'm Dr. Andrea Grim. I'm a doctor, investor and entrepreneur. And I founded moneywisedoctor.com to help doctors and healthcare professionals make smarter financial decisions. Now, let's dive in. Now, before we go into the details, first, why should you even start investing for your child now rather than later? Why now? Especially if they are just sort of like young, under five? The magic word is compounding, which Albert Einstein, that great scientist of the last century, described as the eighth wonder of the world. So basically, the earlier you start, the more time your investment have to grow. Compound interest means your returns earn returns, so your returns earn more returns. And it snowballs over time and it becomes quite big. Imagine planting a seed and watching it grow into a massive tree. Better yet, imagine a whole forest that's the power of compounding, but it does need time. Now let's dive into the details, the specifics and look at a few options. Number one, the Junior isa. So basically, Junior ISA is Junior Individual Savings Account. So it's a tax free savings account designed specifically for children. Once you invest in it, your returns, whether from interest or investments, are completely tax free. Now who is eligible? Any UK resident under 18 can have a Junior ISA and can contribute a maximum of £9,000 annually. Now let's look at the pros and cons. One of the benefits obviously is tax free growth. All the returns, whether dividends or capital growth, savings investment returns are entirely tax free. That's quite huge. Two, there's a generous allowance. So if you have one child, they can have a £9,000 allowance. Even if you have two children, you can have like an extra £9,000. So if you imagine a family of four, that's a whole £58,000 ISA allowance for you. And if you don't understand that, check my other videos on ISA. Adults have like ISA allowance of 20,000 each. Obviously there are a few cons. Is locked until 18. You can't access the money until they turn 18. Neither can they. And second thing that people worry about is you have no control. Once they turn 18, the money is entirely theirs. Whether they decide to save it or splurge it on a brand new Ferrari is up to them. They might throw a huge party, whatever it is. But a few examples to understand this. Let's say you contribute £9,000 annually for 18 years at an average of 10.47% per year. I mean, looking at the average historical return of the stock market using the S&P 500 on their 18th birthday, this money will be worth about £400,000. Okay, let's say you're not even doing the whole 9,000. You're doing £1,200 per year. That's about £100amonth. They'll still end up with about £55,000. So again, if they leave this money even further, there's no rule they have to spend about 18. It grows even further and give them that financial backbone. The second one is the genius sip. So genius basically SIP is self invested personal pension. In the junior ship, the government has 20% tax relief on contributions even though your child is not earning. Yet again, it's pension. So any child under 18 can have a junior ship. You can contribute up to £2,880 annually and the government has 720, bringing it up to 3,600 per year. Again, some of the pros, you get the tax relief, 20% tax relief on every contribution you do. And there's long term growth. Because since the money is locked away until retirement as pension, it compounds compound interest has several decades to work its magic. Again, the downsides are part of the benefits that the downsides locked away to retirement, the money cannot be touched, they cannot assess it until the child turns 57. I think it's, it's going to be 58 from 2028. So example, if you had £3,600 in a genius ship annually and we are using the same 10.47%, this is just basically on stock market returns. It's 1.3 million pounds by retirement for your child. So starting this early could set up your child for life. Imagine if you started investing for your child and you gave them a pension pot that size. Now the next one is real estate, which most people know about. There's buy to let property. You can invest in a buyer to let for the future and you're considering long term investment returns. Real estate could be another option. It could be to purchase a property today, you rent it out and later use it to fund your child's education or their first home, or even as a gift. So a lot of people actually already do this. Now some of the benefits are real estate is passive income. You could generate rental income which can be used for the cost of raising your child, educational costs and other expenses. I know that recently buy to let has had a lot of issues basically in rules and laws change. But property also appreciates in value. It generally rises over time so that when your child is ready to use it, the house can be significantly worth far more than what you bought it for. Of course there are the downside. Real estate comes with its own headaches. There is the three T's, the tenants, toilets and trash. Of course there are ongoing costs, maintenance, you have to pay taxes, mortgage payment. But that's not the only thing. Real estate is also illiquid. It's harder to sell. It's hard to sell property quickly compared to shares or funds in an ISA or a sip. Example, for instance, let's say you buy a Property today for £200,000 and roughly an annual appreciation rate of 3% by the time your child turns 18. If they basically were born today, that property would be worth over £300,000. Plus you would have earned rental income over those years, making it a dual purpose investment. Again, a lot of these numbers are based on historical figures and this might change in the future. Now how do you get an ISA or a Junior sip or a Junior isa? As usual, you have a range of choices from investment apps, online platforms, or local banks. But remember, each option comes with its own features. It's essential to carefully review the T's and C's terms and conditions and make sure you're not paying any unnecessary charges or taking unnecessary risks. Make sure the platform aligns with your own financial goals.

Congrats on getting this far. And as promised, I've got something special for you. My Investment Jargon Buster. I mean, one of the challenges new investors complain about a lot of times is not understanding the terms and feeling like it's a foreign language altogether. And that also makes things look a bit more complicated. So I've designed a quick guide to help break down common financial terms and make investing much easier for you to understand. You can grab your copy via the links in the description or check out the comments if you are on the YouTube channel. Alternatively, you can head over to www.moneywisedoctor.com investing jargon buster enjoy. And if you struggle at all to get it, just leave us a comment or send us an email@supportoneywisedoctor.com I'll make a copy available for you.

Thank you to my upcoming newsletters. I'm going to be diving into the best platforms I've researched and are currently researching for junior ISAs and SIPs, their fees, their benefit and options. And to get this guide for free when it's ready, head over to moneywisedoctor.com subscribe so that you'll be notified when it's ready to go live. Now the final thoughts Whether it's a Junior ISA or Junior SIP or real estate, the key takeaway is to start early and let compound interest do the heavy lifting for you. Even small, consistent investments can grow into something substantial over time. Now if you found this video helpful, you might want to check out my other videos on things like like self invested personal pensions as SIP, NHS pension or ISAs. In fact, there is a great one about everything about ISAs where I go into details about the different types of ISAs, including the lifetime ISAs, stock and shares ISAs as well as cash ISAs. The eligibility, the pros and cons. I also show you how I personally use them for maximum benefit. But let me know in the comments if there are any topics you'd like me to cover and I want to hear back from you. Would you choose a genial isa? Would you choose a genius SIP for a little one. Just start investing now for a little one. Well, thanks for joining me on Moneywise doctor Podcast and see you again next week. Bye. Bye.