Is paying into a child pension still worthwhile?
Discussion
I started a junior sipp for my daughter In 2017 when she was 8 and pay in each month. Not a huge amount only £100 a month (+ a lump sum at the beginning) but I wanted to take advantage of the sum that gets added by the government and also give her a head start so when she’s 60+ she’s got a fighting chance of a reasonable retirement.
I have some spare money I could add into this years pot to take to max £2880 and still get 20% added. But with this whole covid thing I’m running a bit scared / gloomy about the future. Feeling a bit apocalyptic about the markets / economies. I’m really thinking is it safe? Could all these companies end up going to the wall, economies down the s
tter, and I’m just throwing my money away? Sounds silly now I write it down, just wondering what you think?
Also government screwing with pension ages and no doubt tax stuff in the futures to pay back the st-tonne of money they’re throwing at everything.
I have some spare money I could add into this years pot to take to max £2880 and still get 20% added. But with this whole covid thing I’m running a bit scared / gloomy about the future. Feeling a bit apocalyptic about the markets / economies. I’m really thinking is it safe? Could all these companies end up going to the wall, economies down the s
tter, and I’m just throwing my money away? Sounds silly now I write it down, just wondering what you think?Also government screwing with pension ages and no doubt tax stuff in the futures to pay back the s
t-tonne of money they’re throwing at everything.Don't worry, its a great thing you are doing.
Of course there will be boom and bust times, but the idea is to just ride it out over time.
Investing £100 per month from aged 8 to 60 at a reasonable long term ftse 100 average of 8% will see her with a pension pot of nearly £900k.
Time in the market beats timing the market.
Of course there will be boom and bust times, but the idea is to just ride it out over time.
Investing £100 per month from aged 8 to 60 at a reasonable long term ftse 100 average of 8% will see her with a pension pot of nearly £900k.
Time in the market beats timing the market.
CoolHands said:
Also government screwing with pension ages and no doubt tax stuff in the futures to pay back the st-tonne of money they’re throwing at everything.
That would be my concern - pensions are political footballs with lots of strings, if that's not mixing metaphors. But as for investing in general, you could also take the view that the only way is up...t-tonne of money they’re throwing at everything.I think best advice advice when planning for the future is diversity of vehicle so do a bit of both. I think it’s when not if the higher rate tax relief on pensions disappears but don’t think it will disappear totally....the Govt needs to encourage people to save so they aren’t reliant on the state.
I do both for my kids. My hope is with the pension that when it comes to that time in life when they have a mortgage and a young family they can take a few years out of contributing to their pension because they will be ahead of the game.
I do both for my kids. My hope is with the pension that when it comes to that time in life when they have a mortgage and a young family they can take a few years out of contributing to their pension because they will be ahead of the game.
I think it will get harder for people to start their own pensions, by the time they come out of university they have student loans to pay back, so probably won’t be able to afford to pay into a pension for quite a while. Any pension help they can get as a child could help to compensate for that.
If you are wealthy then child SIPPs are a great idea if you are able / willing to distribute other wealth at stages before sipp age. If its your only shot then an ISA would be better I think as it allows access earlier.
IMHO (as a non parent but as someone who grew up with zero financial support and had to find my own way) those who seem to do better in my age group get financial help in their late 20s and early 30s. It gives them that boost at the time when money is tightest.
If I had a child then I would be looking to do something at those kind of ages rather than when they are 60.
I also think financial education its worth its weight in gold at say late teens. Proper understanding of investments and compounding etc. Also borrowing etc. Tax breaks. ISAs/SIPPs etc etc. It took me till me late 20s to get any kind of knowledge on the subject and it was 10-12 years wasted IME.
IMHO (as a non parent but as someone who grew up with zero financial support and had to find my own way) those who seem to do better in my age group get financial help in their late 20s and early 30s. It gives them that boost at the time when money is tightest.
If I had a child then I would be looking to do something at those kind of ages rather than when they are 60.
I also think financial education its worth its weight in gold at say late teens. Proper understanding of investments and compounding etc. Also borrowing etc. Tax breaks. ISAs/SIPPs etc etc. It took me till me late 20s to get any kind of knowledge on the subject and it was 10-12 years wasted IME.
red_slr said:
I also think financial education its worth its weight in gold at say late teens. Proper understanding of investments and compounding etc. Also borrowing etc. Tax breaks. ISAs/SIPPs etc etc. It took me till me late 20s to get any kind of knowledge on the subject and it was 10-12 years wasted IME.
10 years ago I offered to go back to my old school and do exactly this. They were not remotely interested.JulianPH said:
red_slr said:
I also think financial education its worth its weight in gold at say late teens. Proper understanding of investments and compounding etc. Also borrowing etc. Tax breaks. ISAs/SIPPs etc etc. It took me till me late 20s to get any kind of knowledge on the subject and it was 10-12 years wasted IME.
It’s crackers that that there is no mandatory schooling on how to manage financial affairs. Every 14-16 year old should learn something about it IMO. 10 years ago I offered to go back to my old school and do exactly this. They were not remotely interested.
Per below MSE link, finance education is available in the schools following the national curriculum, but even so, I still feel the parents should also take lead responsibility to educate their kids on personal finance and budgeting etc..I can't watch Martin Lewis for more than 2 min on TV, but he has my total respect as he's been championing financial education to the general public for many years.
https://www.moneysavingexpert.com/news/2013/09/fin...
Back on topic. As part of my financial plan, I am in a fortunate position to contribute both JISA and SIPP annually for my 2 girls. I see the benefits to both, but I tend to contribute more into JISA as I feel their financial demands will be higher during their early stage of adulthood. I hope they will sensible with their wealth, if not, at least some will be locked / protected in their pension for their later years!
https://www.moneysavingexpert.com/news/2013/09/fin...
Back on topic. As part of my financial plan, I am in a fortunate position to contribute both JISA and SIPP annually for my 2 girls. I see the benefits to both, but I tend to contribute more into JISA as I feel their financial demands will be higher during their early stage of adulthood. I hope they will sensible with their wealth, if not, at least some will be locked / protected in their pension for their later years!
Gassing Station | Finance | Top of Page | What's New | My Stuff