Would you like to give you children £1,000,000?
What would you do if your parents arranged a lump sum of £1,000,000 for you when you reached age 65? Re-evaluate your retirement options, upsize / downsize your property, spend more time with your family, change your car etc etc. Quite simply you’d have more options open to you for you to decide what yours and your families future may look like.
What if I told you, you can achieve this amount by only saving for 18 years and with a smaller amount than you might think.
A nil rate tax payer e.g. a new born baby can have it’s parents / grandparents pay into a pension for them up to a maximum of £2,880 per annum (£240 pm). These monies are then given tax relief and turn into £3600 over a year (£300 pm).
Lets assume a growth rate of 5% for the whole duration of being invested (some years will be higher and others lower), by paying in £240 pm until the baby reaches 18 you / grandparents would have made contributions for the amount of £51,840 (£64,800 gross) with the growth you can expect the investment amount to be in the region of £104,760.
At age 18 if you then stop paying into the child’s pension. At age 65 you can then expect to see an investment of £1,093,118, of which under the current government rulings is also free from inheritance tax.
So quite simply starting early will give your children more options later on in life.
If you would like to know more about this or something more specific to your financial needs why not give us a call today on 01483 654135
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.