Thousands of families each year make the decision to invest solid chunks of cash in their kids’ futures. In terms of where that cash comes from, some take loans, others dip into their savings, some choose equity release – any number of options to explore. Bridging loans are likewise becoming a popular choice for those looking to invest a lump sum for their kids in a variety of ways, to be paid back over a short-term repayment period with the lowest possible borrowing costs.
But how and where exactly should this money be invested? For those who aren’t exactly up to expert levels when it comes to savings and investments, what represents a safe option for delivering high and reliable returns?
For obvious reasons, the answer depends entirely on market conditions at the time. Hence, it could be an entirely different answer depending on when exactly you’re reading this article. That said, the most important consideration is that of what exactly you intend to achieve with the investment.
Low = Secure, High = Risky
Every investor would prefer to place their equity in the kind of scheme that offers maximum returns for minimal risk. Unfortunately, this just isn’t how it works. If it was, every investor in the world would be spectacularly wealthy and going broke wouldn’t be a thing. In reality, it’s a case of the lower the potential returns, the safer the investment. The greater the returns you aim for, the greater the risk you must be willing to take.
If you are looking to put the cash away for at least 10 years or so, a good option would be to invest in shares. Just as long as you choose the right company to invest in, you can largely guarantee yourself and your kids a decent outcome. What’s more, if things take a turn in the wrong direction, you can always sell-up and bail out accordingly – hence minimising losses.
Fixed interest accounts and property investments are also considered to be relatively safe havens for investors. In both instances, you’ll need a fair amount of money in the first place to be able to generate any significant returns. And once again, you’ll need to make sure the money can be put away for as long as possible – 10 years plus – for the gains to begin to stack up. Junior ISAs are a popular choice, giving your kids the option of accessing their funds when they turn 18, or keeping them put away to continue accruing interest.
As for kicking their pension savings off early, doing so can be great for taking care of their later years and stacking up a solid amount of interest along the way. But at the same time, the obvious downside is that of being barred access from the funds until the individual in question reaches the required age – usually 58 or later.
With so many options available, it pays to speak to a reputable independent broker or financial advisor, before making your final decision. Even if required to pay for the input of an IFA, it beats the prospect of potentially heavy losses and the reduction in the value of the ‘nest egg’ you pass on to your kids.
This article was brought to you by the team at bridgingloans.co.uk.
"If you are looking to put the cash away for at least 10 years or so, a good option would be to invest in shares. Just as long as you choose the right company to invest in."
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