Families thinking about how to save and invest most efficiently during 2020 shouldn’t overlook pensions for children. Many people don’t realise that in addition to their own pension contribution allowances they can put money into someone else’s savings.
And even if the recipient is a non-taxpayer, as most children are, they’re still entitled to tax relief on the contribution. Investing £3,600 a year, the maximum allowed, on behalf of a child will cost you only £2,880. The provider you choose then claims an additional £720 from the taxman to top up your contribution.
Setting up a pension for your children might seem odd, not least because there’s a good chance you won’t be around to see them cash it in. But HM Revenue & Customs said last year that 60,000 families have opened pension plans for kids. The key argument in favour of such arrangements is the power of compound investment returns over the long term. If you pay the maximum into your child’s pension each year until they turn 18 and the plan achieves a return of 5% a year, they’ll have a pension fund worth £1m by the time they reach age 64.
The downside to pensions is that they’re inflexible. Under current rules, you can’t cash in a pension until the age of 55 and this limit is due to increase over time as the state retirement age creeps up. So all the savings you’re putting by won’t be available to help children with financial priorities early in their adult lives: the cost of further education, buying a first house or starting a family, say. Nevertheless, those priorities are exactly why many people don’t get round to starting a pension plan until later in life.
Even among occupational pension schemes, opt-out rates are much higher among younger people. And since pension saving works best the earlier you start, taking this worry off your children’s hands could prove very useful indeed. One caveat is that future governments could change the rules so that pension saving becomes less tax-efficient. It’s now also much easier to pass on pension savings to your heirs.
So one alternative to setting up designated plans for children is to maximise your own contributions in order to increase the chances of there being money left over. If you die before 75, your heirs will usually inherit what is left of your savings free of tax; even after age 75, you can still bequeath pensions cash, though it’s likely that tax charges will be payable.
Motivational Quote Of The Day
“The truth is rarely pure
and never simple.”
Oscar Wilde
Alternative Quote Of The Day
“My wife has to be the worst cook. Her specialty is indigestion.”
Rodney Dangerfield
Hot Bodies
I’ve noticed that after the weekend, our office is always several degrees colder than it is later in the week, even though the heating has been left on. Increased computer activity plays a part, but so does human activity. The staff come into the office, they give off body heat and it warms the building.
Now this is happening everywhere. The amount of heat energy given off by the population must be huge. So is there a way to harness it? It turns out that there is.
Over 200,000 people pass through Stockholm’s Central station each day. Jernhusen, a property company given the job of remodelling the station, have come up with a way of transferring the heat generated by all these people to an office building across the road. The stations ventilation system includes heat exchangers which convert all this heat energy into hot water. It’s reported that the result is a 25% reduction in the buildings energy costs.
Needless to say, green energy is on everyone’s agenda at the moment, and initiatives like this are likely to be on the increase. Perhaps something to invest in, or even participate in for those with the skills and resources.
Today’s National Day
NATIONAL GIVING HEARTS DAY!
PUBLISHERS NOTICE
“HE JUST WON £1,460 IN TWO DAYS! “
Dear Streetwise Customer,
“OMG, Ludlow 3:45…two horses to back. Bott N Brown WON at 25/1 !!! Average odds taken on Betfair exchange 80/1. I backed for £12 winning me £960. Can you please thank Bill for me.”
G.B – 6th February 2020
“Many thanks. Thursday OMG Newcastle 5:30. Special Lady WON 50/1. Won £500. “
G B – 7th February 2020
A couple of weeks ago we wrote to you about The Hermes Strategy, a unique approach to horse racing created by Bill Burrows. I’ve reproduced word for word, two emails I received this week from one of our customers who tried the strategy for the first time just a few days ago.
He just won £1,460 in two days!
Needless to say, he’s pleased!
Now we don’t get 80-1 and 50-1 winners every day (although it looks like we do at the moment!) but because this strategy looks at the whole thing from a VERY unusual angle, long odds winners come along pretty regularly alongside more mundane wins.
It all adds up to a great second income for anyone able to spend 7-10 minutes a day putting the strategy to work.
For full details, take a look HERE
You could very easily be up and running and copying Bill within a few hours of reading about this. Everything you need is at your fingertips.
Best Wishes
John Harrison