How to make your child a millionaire

The Sunday Times claimed that using popular tax shelters, you could accumulate over £1 million for a new-born by the age of 50 by saving just £240 per month for 18 years.

Its calculations assume you put the maximum permissible into a pension fund for the child, £2,880 per year which benefits from ‘tax relief’ and boosts it to £3,600. Other savings go into a Junior ISA so that all income and gains are also tax-free. By age 18, the pension fund alone will be worth about £116,000, and if it grows by 5% a year after that will top £1 million at age 65.

In the last tax year, over 430,000 new Junior ISA accounts were opened but only about 10,000 ‘child pensions’, yet with the new pension freedom rules and the tax relief you get far more ‘bang for your buck’ with child pension savings. And as one ST reader remarked, they won’t be able to blow the money at university as they could with a JISA.