Grandchildren could get a £40,000 ‘head start’ through investment

Parents may be unable to save for their children’s futures despite wanting to do so, due to the cost of living. However, according to new research, many grandparents may still be in the position to give.Traditionally, putting money aside for a child’s future comes in the form of cash and can start later in a young person’s life. But according to data from Nosso shared with Express.co.uk, there can be a stark difference between starting early and starting later when it comes to investment.If a grandparent starts saving for their grandchild from the age of six with a monthly investment of £150, their total investment will be £21,600 by the time the child reaches 18.With investment growth, based on an annual return of 6.33 percent, the value of the investment would be £32,292.READ MORE: State pensioners set to miss out on another bumper triple lock boost Grandparents could give grandchildren a £40,000 ‘head start’ by taking action early (Image: Getty)However, if a grandparent were to save £100 from birth, their total investment would still be £21,600, but their return over the period would be £40,317.Just by starting earlier, a grandchild’s investment could be worth £7,925 more when the child reaches 18.By investing, grandparents could be giving their grandchildren a major head start in life, and this money could go towards getting on the property ladder, covering university fees, or chasing a specific dream.Express.co.uk spoke exclusively to Youssef Darwich, co-founder and CEO of Nosso, who offered insight on the matter.DON’T MISSSeven key groups who may have been underpaid state pension [ANALYSIS]Readers argue state pension is not enough for retirement [INSIGHT]’Good news’ for pensioners as Bank of England hikes interest rates [UPDATE] Grandparents could help their grandchildren save towards life goals (Image: Getty)’They don’t have to pay tax on the interest and/or growth of the investments – and neither do their parents.’Instead of buying gifts for one’s grandchild, a grandparent could instead gift money instead of physical presents.Finally, Mr Darwich suggested people use their gifting allowance, as everyone is entitled to gift £3,000 a year tax-free.He continued: ‘If you’ve got any extra monthly income which you’re not using, then you could set up a Direct Debit to make a regular gift payment.’By giving money in this way, people could help their loved ones to avoid the issue of inheritance tax later down the line.Mr Darwich pointed towards the Bare Trust from Nosso which allows grandparents to invest and manage money for grandchildren, while using their grandchildren’s tax allowances. There are various ways to save or invest, and people can contact their provider to find out more information. Investment is not suitable for everyone as capital is at risk and people could get less back than they originally put in.