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Your Money > Family Finances Articles > Make your child...
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By Harvey Jones
More than half of UK children believe they will become a millionaire one day. This is how to make sure your child doesn't grow up with the crushing disappointment of not being a millionaire. In the midst of a recession, our kids remain undaunted. Although only 0.5% of the nation is currently a millionaire, 51% of our six to 10-year olds believe that they will manage it, according to new research from Tesco Savings. Go kids! The kids are right Now you might expect me to embark on a rant about our ugly material values and the inflated financial expectations we give our kids, but I am not going to do that. Kids are right to want to be millionaires, because I imagine (and sadly, I can only imagine) that a millionaire is a very useful thing to be. A lot of my day-to-day worries could be solved by the swift injection of a seven-figure sum, such as deadlines, the cleaning, our conked tumble dryer and drafty windows. Millionaires do not have to worry about these things, and kids know that. They are not stupid. Parental duty And I do not see why parents cannot give them a helping hand. All must have prizes, and if the prize just happens to be a million pounds, then surely it is the duty of every modern parent to supply it. Here are some tips and ideas to make sure your child avoids growing up with the crushing disappointment of not being a millionaire. Hand it over Of course the easiest way to make your child a millionaire is to simply give them a million pounds. As Winston Churchill said, saving is good, especially if your parents do it on your behalf. So come on mums and dads, fork up! In the entirely possible event that you cannot lay your hands on a million pounds in ready cash, you need to draw up a strategy to GET THAT CHILD A MILLION. Here are some suggestions. Die Get your house valued. Is it worth a million pounds? If so, then your childs path to riches is wide open. In fact, only one thing stands in their way: You. You do not have to die immediately. You might want to wait until they are 18, and a little more fiscally responsible, before you pop off. And if you have more than one child, or for some astonishing reason your house is not worth a million (should have moved to London!), you might want to leave it a little longer. Parenting is all about making sacrifices, and this is the ultimate, after all. You know they are worth it. Not altogether sure this is a good idea? Well, if you are not willing to die to make your children rich, then you will be encouraged to hear you have other options, too. Work The easiest way to make your child a millionaire is to be one yourself. Set up your own business, work every hour God sends, and with a little luck and a lot of application, you could one day be worth a pleasing seven figures. Your kids will thank you for it, and if you are lucky, they might even join the family business to keep it going. Given the state of the job market, they may have little alternative. So, when you get up for work tomorrow, decide to become a millionaire. You owe it to your child. Play Play the lottery. Duh! Save I have done some number crunching here, and I have worked out that it is possible to make your child a millionaire by saving, provided you start early and put aside a lot of money every month. If you save £1,350 a month for 25 years, and earn an average compound interest rate of 7% a year, you will accumulate £1,063,485. If you think 25 years is too long to wait for your child to become a millionaire, and 18 would be fairer, you will have to save £2,500 a month. That is actually less than I would have expected, but there are one or two provisos. First, you may have more immediate uses for that money. Such as food. These figures assume you start saving the moment your kids are born, and also ignore the wily taxman, who will take a fair chunk of your annual growth, especially after the anticipated demise of the tax-free child trust fund (CTF). Outside the CTF, only the first £100 of interest and on a child savings account is tax-free. The rest is taxable on the parents. So you might need to pay in a lot more. But again, are your kids worth it? Of course they are. Plan There is a more affordable way to make your children millionaires, but inevitably, it will take a lot more time. About 55 years. You can take out a pension on your child's behalf, and invest £3,600 a year. If save £150 a month from birth and continue saving right through your child's adulthood, they will have £1,075,978 by age 55, which is the earliest you can draw a private pension (to be increased from 50 in April). Better still, you can claim tax relief on your contributions, at either 20%, and there is no annual tax bill on the growth. Your kids will have to pay tax when they draw the income, but that is their lookout. They have to do something for themselves, and age 55 is a good time to start. Start now I am sure there are plenty of other ways of making your little adorables the million they surely deserve. So come on, it is your duty as a parent. More from lovemoney.com |
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