If you’re looking for the best way to save for your child’s future, you might be baffled by your options. And rightly so - too much choice can actually cause a lot of stress. So when it comes to varying withdrawal policies and maximum input jargon, figuring out where to start can be hard. But don’t worry, it doesn’t have to be so complicated. There is one really simple step that you can take before you even start considering which option to choose.
One of the easiest places to start with any investment goal is to set one. Whether you’re saving for your child’s future or even investing for retirement, you can simplify things right now, with one simple question: What do I want to achieve?
Why is setting an investment goal so important?
Not only can your answer give you a kick-start in the right direction, but a few years down the line, it can also be your easiest measure of success. If you think about it, how will you know that you have finished the race if you never decided on a finish line? If you know where you want to be, you’ll know whether or not you’re on the right track.
How can I set an investment goal?
It may sound like an unnecessary step, but taking some time to think about this, and formulating it into a couple of sentences could add an immediate ounce of clarity to your financial plan.
Do you want to create as much wealth as possible before your child turns 21? Is avoiding loss your ultimate mission? Are you willing to take risks in pursuit of higher returns?
When brainstorming, you might find it useful to separate your goal into four subsections. For example:
- Goal amount: I want to give my child £12,000 or I want to give my child as much money as possible
- Deadline: On their 21st birthday or when they turn 18
- Monthly budget: I can afford to set aside £50 a month or I want to save £500 a month
- Risk attitude: I want to avoid risk or I don’t mind taking risk in the hope of pursuing faster growth
Note: A bonus point to consider is how comfortable you are with having your cash tied up. When saving for your child’s future, some popular options don’t give you instant access to the money you have dropped in.
Setting an investment goal is one thing, but setting an achievable investment goal could be a lot more productive. Set aside some time to do the maths. Realistically, is your goal amount achievable considering your monthly budget, attitude towards risk and deadline? If you want to give your child £15,000 in 3 years, but you can only afford to set aside £100 a month and you don’t like taking risks, you might be a long way off.
Think back to where you drew the finish line. Then come up with a plan which can help you win the race. Once you’ve set an achievable goal, choosing which option is right for you might not feel like such a leap of faith.
Written by Jenna Kamal
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
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