There is arguably no sweeter time in life than when you’ve just got married, welcome your first child into the world, and begin to plan and build for the future you want your family to enjoy.
Most grandparents will tell you that it's never too early to get your finances in order, invest wisely and educate yourself about the smartest ways to get ahead and leave a legacy behind for the next generation. Those who've done it can bear the proof of this wisdom, and those who didn't will often carry regret.
Thankfully, young adulthood is the perfect time to get your financial affairs in order, offering the potential for greater returns later in life. Investing wisely now can enable your future young ones to enjoy the advantages of a potential university fund, driving lessons, possibly even a first car, and generally a leg up into the world.
Investing in Your Life Together
Throughout your life, you will need to make many financial plans and decisions. For new couples or parents, you will want to have life insurance and income protection in place, so that you're both protected should something bad happen. You will also want to set a plan to ensure you have an amount set aside to fund your retirement. It's also a great time to start making smart decisions about how to save for your future generations.
While retirement planning and having kids in university may seem far away for some, the time to prepare for these events is while you are young, when you have many years to make your investments work for you - working smarter, not harder.
Life insurance and income protection
It’s never nice to think about situations that could devastate your family but having a plan for these situations will help to make them less of a burden should they occur. You must plan for them. Establishing life insurance and income protection will ensure that your family is well looked after should something happen to you.
Learn more about life insurance and protection.
Planning for retirement
Building wealth while you are young requires equal parts of smart investments and smart planning. Those who plan how they want to live in their retirement years are more likely to reach their financial goals, because they are more aware, at every stage of life, whether they're on track and what steps they need to take to get there if not. Sitting down with a financial professional who can highlight every element that needs to be considered for your long-term financial planning and enables you to plan more effectively for your future. This means you can rest easy in your retirement, with your life and the life of your kids being financially secure.
Investing in your pension
Investing in your pension doesn't necessarily just mean starting a savings account. There are many ways to make your money work harder, and investing your pension wisely is one way to turn a little into a lot over a long-term period. If you start pension planning in your 20s or 30s, you can explore long-term investment portfolios to help you meet your retirement goals. Current pension regulations mean you won’t be able to access your pension until you’re at least 55.
There are different types of pension you can opt for, with differing features and benefits. Stakeholder pensions have capped charges of 1.50% for the first ten years then 1.00% thereafter. They have no initial or exit fees, and while the fund range can be more limited than some other types of pension, Stakeholders can be the ideal solution for someone just setting out on their pension saving journey. Personal pensions can offer a wider investment range but may also come with higher charges. A Self Invested Personal Pension, or SIPP, is probably the most flexible type of pension in terms of investment options. SIPPs tend to have set up fees and can also have additional charges when you come to take money out in retirement. You may have a workplace pension. Do you know how much is being contributed by you and your employer? Are you able to make additional contributions, e.g. via salary sacrifice? And do you know its investment strategy?
Learn more about saving into a pension.
Investing in Your Children
The longer you can invest, the higher the potential returns might be. So, imagine the potential of investing money wisely for your children when they are born, in an account that is untouchable and growing until they turn 18.
In the UK, a Junior ISA, or JISA account, is a smart way to invest in your children's future. Anyone can contribute to it, there are great tax benefits when compared to parents saving in their own accounts, and it's untouchable until the child is 18. A JISA is very much a set, forget, and watch it grow kind of investment (although you are always free to change provider if you choose).
Learn more about JISA’s.
Start Planning and Investing
Planning for intergenerational wealth is something that should be done sooner, rather than later, to help establish the financial measures that will later benefit your children, and possibly even your future grandchildren; not to mention yourselves.
For parents, planning and investing are equally as important, and we at Wise Investment can help you with both. Wise specialises in long-term financial planning that is designed around your goals for optimal wealth management and creation.
Contact us today to learn how we can help you plan for retirement and creating intergenerational wealth.
The above information is for educational purposes only and is not a personal recommendation or investment advice. If you’re unsure about the suitability of a particular investment, you should speak to an authorised financial adviser. As you probably know, the value of investments and the income from them can go down as well as up, so you might not get back the amount you invest.
We’ve made every effort to ensure the information above is accurate. Content is based on our understanding of current law and practice at the time of writing, which could alter as a result of future legislation. ISA limits are subject to change and the favourable tax treatment given to ISAs may not be maintained in the future. Tax treatment may depend on your individual circumstances. This article is aimed at UK residents.
Wise Investment is authorised and regulated by the Financial Conduct Authority. Our FCA number is 230553. Registered Office: The Great Barn, Chalford Park Barns, Oxford Road, Chipping Norton, Oxfordshire, OX7 5QR. Registered in England 4970458.