Money Saving Tips: Make Small Savings BIG With Compound Interest

As the new year kicks off, many Britons are taking time to reassess their finances. From renegotiating loans to making sure your spending is in order, there are plenty of ways to organize your financial life. And, for parents, making sure you’re maximizing the potential of your children’s savings will be of the utmost importance. So what’s the “key” factor to growing your youth’s wealth?

Rob Gardner, the founder of Redington Investment Consultants and an advocate for better financial education for young people, shared some tips for making the most of your child’s savings.

With parents, guardians, and even grandparents able to open bank accounts for children, this could be a great way to kick-start their future funds.

In order to form the habit of saving, Rob – who created the financial card game for children, Silly Monkeys – recommended that youngsters be encouraged to set aside a small amount of their pocket money – such as every £1 on £5 they have it – and store it in the bank.

And, when they hit big bucks, like at Christmas, it could be a great opportunity to sow the seeds for money-saving rewards in the future.

For example, why not place the funds in a Junior ISA or a private pension plan?

According to Rob, the “key to growing wealth” is compound interest.

He told “Compound returns are where the money saved is invested over time to make even more money. It’s the practice of saving in a savings account. investment, for example an ISA or a pension, and to reinvest any returns earned again so that next year the money is earned on both the original amount saved and the interest earned. next year, and the year after, the amount increasing each time.

“A rule of thumb is that a return of 7% for 10 years doubles the original money. If then left for another 10 years at 7%, it doubles again. Investing in stock markets in the short term can be risky but over the longer term, it can be a great way to grow your savings.”

Compound interest is the addition of interest to a principal amount of a loan or deposit.

In this type of savings, interest is earned based on the total amount in the account – including previously earned interest.

This means that interest is paid to the saver in addition to the interest he has already accumulated.

And, over time, that means your kids could raise more money.

Last week, money-saving expert Martin Lewis was on hand to offer advice on where customers might want to put their money in January.

Speaking on ITV’s Good Morning Britain, the 46-year-old unveiled two banks that were offering up to £150 to savers who went through them.

First Direct and HSBC are two of the banks currently offering this type of cash bonus.

However, unsurprisingly, these opportunities come with different conditions.

By upgrading to a current account with First Direct, new customers will have access to £100 free.

On the other hand, HSBC is giving newcomers the chance to get £150 back if they switch to the HSBC Advance account – although this requires a change of two direct debits and at least £1,750 to pay per month.

READ MORE: How to save money: Couple reveal they saved £400 every month with expert’s 5 simple steps

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