Should you invest or save for your children? Best funds, best buys, kids pensions and more

Martin Lewis (0:01)

If you're asking me about saving, have you thought about investing? We're going to talk you through exactly how you do that and the practicals of that.

Adrian Childs (0:06)

You've made the rules. It'll be a big ah-ah for me and a big hallelujah for you.

Martin Lewis (0:10)

No, it's what I do. It's what many people who work in the industry do. If the world economy is growing, then your ETF should grow.

Adrian Childs (0:17)

It's Martin's world, we all live in it.

Martin Lewis (0:20)

Hello, I'm Martin Lewis, and this is the cunningly named The Martin Lewis Podcast. Do you know what that's going to be about? I don't really, I know. And this is our Big Topic episode, where each week we lead on one main subject to help you save. Usually, most of it comes from my BBC Radio 5 live show with Adrian Childs, but there's also bonus money-saving tips and tricks for you lucky, lucky podcast listeners. In today's episode, everything you've ever wanted to know about putting money away for under-18s. Is it best to save or to invest? Spoiler, most people should be considering investing.

How do junior ISAs and child trust funds actually work? What are the best buys for both of them? What are the best funds to invest in? Are premium bonds still good for children? And we'll even go into the little talked about, but really important children's pensions. I'm joined by an investment specialist to go through it all, and we're going to cover every single bit of it.

Then this week's Tell Us, when did checking a bill or invoice properly save you money? What did you spot and how did you save? We'll hear from somebody who used AI to cut a thousand pounds off a wrong rental bill. The mastermind this week is a fascinating question. What are your legal rights if you buy something and the shop puts it on sale the next day? And finally, if you listen to the end, there's a special tip for an easy way for 13 to 17 year olds to make a free 50 quid. Play the theme tune.

Adrian Childs (2:05)

So, is there anything you generally want to say about investing for children, saving for children?

Martin Lewis (2:10)

The big topic, the big point I want to make today is especially with the junior ISA.

Far too many people go for the cash option. So let's just talk about why. I'll come in to what a junior ISA is, but the basics, it's a tax-free savings account for children. We'll go into a little bit more details later.

But the most important thing to understand is a junior ISA is a product where you lock money away until the child is 18 Most people put money in when the child is young, 1, 2, 3, 4, 5, 6, 7

So the two sweet spot rules for when it is right to invest money over save money is number one, it should be money that you do not need to use for right now. Well, if you are putting it in a junior ISA, by definition, unless they're nearly 18, you do not need to use it for right now. So that one is ticked. Number two, it's money you're putting away for the long term. So over five years. Well, if you're putting money in when the child is five and they don't get the money out till they're 18, bing, so you fall into those two ticks. And yet the huge demand is where's the best place to save in a junior ISA. Grandparents ask it, parents ask it, and we are too risk averse on this. Now, I'm not suggesting you put your kids' money in a single share. That's highly risky. I'm saying that if you look on a broad spread of investments, you know, well, we've got an investment advisor on later, but let's say a global tracker fund, something that invests in a thousand different big worldwide companies that where you get a sort of a graduated average, weighted average of their returns, then on the huge balance of probabilities over a long period, that will smack the pants off savings unless you're very unlucky. And most people, if you're looking to build a nest egg for your children and you're putting money away for a long time, which is what a junior riser is, I'll also be talking about children's savings where you're not locking money away and we'll be talking about pensions and other things, then you should be considering investing it. And I think we make a mistake in this country by not doing so. So if you're asking me my sort of big theme throughout this, I will, of course, answer people's questions on best places to save. I will do all of that. But my big push at the start is, if you're asking me about saving, have you thought about investing? And I want to also, we're going to talk you through exactly how you do that and the practicals of that.