Agreedā¦ itās a very long outlook. It also feels a bit weird to be thinking about a childās retirement when there are more immediate financial milestones to reach.
However, I guarantee you nearly all the families with generational wealth and tax advisers, (ie. Old money and smart money) are maxing out their junior SIPPs to make their next in line wealthy by default. They have generational wealth for a reason and they know what they are doing. So even though I donāt have generational wealth, Iām going to copy them as much as possible.
The compounding of returns and tax back is off the charts over 50 or 60 yearsā¦
Ā£1 a day from birth works out over Ā£100k if you can invest it wellā¦ Calculator below.:
Whereas the Ā£50 a month I plan to put in his JISA should see a lump sum of about Ā£20k when he turns 18. Itās a nice gesture but it wonāt buy much in 2039.
We also need to remember that most 18 year olds think they are geniuses but are actually as thick as two short planks. When I turned 18 I got Ā£2k from my grandparents which they had saved for me over my childhood. When they started in the 80s a sum of Ā£2k would have been a decent house deposit, but by the time I got it it was worth around 20-40 nights out to me. Derp.
So while I will do everything I can to teach him the value of money and how to invest before he has control of it, I fully expect him to buy the latest self flying hoverboard or all the shitcoins or whatever the equivalent of that is in 18 years, and blow any JISA savings before he is 30.
But then he will be able to use his income and growing investment knowledge to keep building the SIPP and make other investments.
TLDR I believe a junior SIPP is a good back up plan or extra layer of financial preparation, rather than a sole destination for childās savings.