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How to turn £240 into a million-pound pension (for your grandchildren!)

By Sam Instone - April 05, 2017

Ever since my children were born, my parents can't keep away. 

They come and stay, and for the entire duration of their visit, I barely see my youngest...

My mum explained it by way of an old proverb that rings true for her and my dad, apparently:

"Perfect love sometimes does not come until the first grandchild".

I think that’s a back handed compliment?

But it’s also been food for thought…

As grandparents adore their grandchildren so much, of course they’d like to invest for their future…

How grandparents can make grandchildren mini-millionaires

1. In the UK, from the moment a child is born, they’re eligible to receive annual pension contributions of up to £3,600;

2. Grandparents can make those contributions on behalf of their grandchild;

3. They just need to invest £240 a month into a pension for them;

4. And over the course of the year, the government will top this up to £3,600;

5. So, that’s £2,880 a year from grandparents, and £720 from the government;

6. If grandparents continue to do this for 21 years until their grandchild has graduated from university, they will have invested £60,480, and the government will have added £15,120 to the grandchild’s pension pot;

7. Assuming 8% growth on a 100% equities pension portfolio, deducting 2% for annual average inflation, investing from 0 until 21, and then leaving untouched until 60…

8. Grandparents can grow a £1.4million pension fortune for their beloved grandchildren!

9. Of course, this doesn’t factor in pension fund charges; and a 100% equities approach might not be appropriate, what’s more, a pension can be accessed from age 55…

10. But then, a sensible grandchild who’s well advised by their wise grandparents will contribute to their own pension as soon as they get their first job…

And so in reality, a grandparent’s £240 a month investment, could grow to well in excess of a million pounds for their beloved grandchild.

Why you don’t have to be a grandparent to benefit from this advice

I hope you found the above step by step guide useful.

But if it doesn’t apply to you, perhaps you can share it with someone else who can benefit?

I'ts our professional challenge to show every client how to make the very most of their financial situation.

And as the above steps demonstrate - it’s not always about how much you invest, but how you invest...

So, whether you’re:

  • Investing for yourself;
  • Saving for a rainy day or;
  • Wanting to tax efficiently allocate wealth to children or grandchildren..

…please let me know if I can help you make the very most of every pound and penny you have; it would be my pleasure.

Save and invest for a better life, book a call - SAM