Let it Grow!
Saving for a child over an 18 year time period is a seriously long period of time.
Like planting a tree, if you plant it when your child is born, it will be substantially bigger by the time they are 18 years old, than if you planted it when they were 12 years old.
Give that tree the right growing conditions and it will also grow faster and bigger. Take the example of a lump sum of £1,000 saved over 18 years, with NO ADDITIONAL MONEY ADDED (just for illustrative purposes because of course we recommend regular saving on top of this!)
A stock market fund earning 14% per year*: £1,000 x 18 years @ 14% growth per year = £10,500
A cash savings account earning 2.6% per year**: £1,000 x 18 years @ 2.6% growth per year = £1,600
Given the right growing conditions, your child could have a savings pot over 6.5 times bigger in order to give them a great start to adult life!
* Taking the example of the Fidelity Global Index fund which has returned an average of 14% over the past 5 years (past performance is not an indication of future returns)
** The average return from the top 3 Junior ISAs in December 2020 taken from the MSE website