How to Secure your Child’s Retirement
Sep 28, 2024Hello Stoic Investors,
Today, I want to talk about something really important:
Secure our children's Financial Future.
The future of public pensions isn't something we can count on anymore.
If you're under 40, there's a good chance that by the time you retire, you might not get much help from the government.
But as parents, there are still things we can do to make sure our children are financially safe in the future, even if pensions don't provide enough support.
With just a small monthly amount, you can start building a retirement fund for your child that could grow to over 1 MILLION by the time they retire.
How can you do it?
1. Open a tax-advantaged account:
In many countries, parents have access to tax-advantaged savings or investment accounts designed for their children's future.
In the UK, this would be a Junior ISA; in the USA, you might use a Custodial Roth IRA or a 529 Plan: and in many European countries. there are similar child investment accounts.
By opening one of these accounts, you can make regular contributions that will grow over time, tax-free, until your child reaches adulthood.
2. Set up a monthly payment:
Once the account is open, start an automatic monthly payment of £40 (or the equivalent).
This money will go into low-cost investments like ETFs, which are easy to manage and grow steadily over time.
3. Let it grow:
If you continue investing £40 a month until your child turns 18, the account will have around £24.260. But the real magic happens after that.
If they leave the money in the account, compound interest will help it grow, and by the time they are 61, that £24,260 could turn into over £1.3 million.
The earlier you start, the more time the money has to grow.
Compound interest makes a big difference because the money earns more over time, and that interest also earns interest.
This strategy doesn't rely on pension systems, which are facing increasing strain due to demographic changes and economic uncertainty.
Instead, it gives parents a way to take control of their children's financial future, independent of government support.
So, Note Down these 3 steps and start secure your child's future today:
1. Open a tax-free account: This lets you invest for your child tax-free.
2. Set up a monthly payment: Invest £40 monthly in low-cost ETFs, which are easy to manage and grow over time.
3. Let it grow: After 18 years, your contributions will reach £24,260. Left untouched, this could grow to over £1.3 million by the time they're 61 through compound interest.
