News

Looking after loved ones is a key concern of people over 50. Many are keen to see their loved ones benefit from their money while they are still alive rather than wait to leave it as an inheritance.

According to research from Saga Investment Services gifting is not just for Christmas. One in five grandparents save regularly for their grandchildren, putting away on average £62 a month, this adds up to almost £13,400 before grandchildren reach their 18^th birthday.

People in the North East are the most likely to be saving regularly for their family with one in four saving regularly for their grandchildren. This compares to London where only one in six make regular savings for their grandchildren.

In addition, one in 12 people over 50 are still investing for their own children. While this applies most to people in their 50s, one in ten people over 80 say they are still saving money for their children. Investments for children tend to be much more significant than for grandchildren, with the average parent saving £212 a month for their child.

And the generosity does not stop there – grandparents gifting money for Christmas say they give each grandchild £74 instead of a present.

In these times of ultra-low interest rates, grandparents are searching for the best home for the money they are saving for grandchildren so that it can grow substantially before it becomes time to give their gift.

Investing the money rather than keeping in it in cash, can be an option for people looking to grow their money over the long term. Whilst investing in shares means that there is the potential to lose money as well as make a profit, keeping your money invested for a long time means that your money has a chance of recovering any short term dips in the market.

Nici Audhlam-Gardiner, managing director, Saga Investment Services, commented: “Saving for grandchildren is a goal of many grandparents, looking to provide a leg up for their grandchildren - whether that’s for driving lessons, their first car or help towards a house deposit. While it might not be as exciting as a beautifully wrapped gift to open on Christmas morning, the money invested will keep on growing long after the children have got bored of their new toys.

“The key thing is deciding where and how you want to invest. Such savings are usually part of a long term plan and it makes sense to invest the money for the chance of a bigger return. There are a number of options for the grandparent to consider. You could choose a Junior ISA, where you can invest £4,080 total per tax year per child, but these need to be opened by the parent and the money automatically transfers to the child when they reach 16.

“A Self Invested Personal Pension (SIPP) is great for long term savings for grandchildren as they cannot access the pension until 55yrs old. You can invest £3,600 in total per tax year per child.

“Or if you prefer to choose yourself when you give the money to your grandchild you could set up a designated investment account, which has no limit to the amount you can invest. It is worth talking to a financial adviser about the inheritance tax considerations of different types and amounts of gifting.

“£62 may buy your grandchild a partridge and a pear tree, but by the time they reach 16, this could get them 52 gold rings!”

About Saga Investment Services

Saga Investment Services has been developed to open up the world of investing and financial planning to the UK’s over 50s in the run up to and throughout retirement, and to make the process as simple and stress-free as possible. Customers can invest from just £100, and have access to investment advice and financial planning services. Saga Investment Services champions a straight forward and transparent approach to investing, and is a proud member of the Plain English Campaign. It is a joint venture between Saga, the leading provider of services to the nation’s over 50s, and Tilney Bestinvest, the expert investment and financial planning group.

IMPORTANT INFORMATION

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press release does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Past performance is not a guide to future performance