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The Momentum™ Savings Plan has been designed to provide a simple and tax efficient way to save for your children’s future.

We all want the best for our children and starting a savings plan early will give them something to build on when they need it the most. Be it a wedding, a first car or a deposit on a property, starting saving for your children in the early years, from just €50 a month will make a considerable difference in future years. The earlier you starts saving the more the effects of comound interest will be beneficial for you.

Key savings principles

When choosing a suitable savings plan for your child many of the same
considerations apply as for adult savers.

There are four key principles that can help ensure you make the most of your money:

i The best time to start saving is now

ii Save as much as you can afford

iii Choose a savings strategy to suit your circumstances

iv Develop a regular savings habit

1. The best time to start saving is now.

Saving for children is all about the long term, so to give your savings as much time as possible to grow, you need to
start saving as soon as possible. The sooner you save the more time your money will have to grow. You will also benefit more from “compounding”, which is the snowball effect you have when the growth your savings have achieved also starts to grow. If you delay, you’ll probably have to invest much more to achieve a similar result. The following graph shows the effect of compounding, based on saving €480p.a. into the MSV

graph to show early savings. curve.

 

2. Save As much as you can afford.

Many people find it hard to work out how much money they will need to save to help their children. This is why we believe

the best strategy is to put aside as much as you can afford. It means you are not just more likely to achieve your goal but you could build up more than you need. Increasing your savings by even a small amount can make a big difference.

Child Savings Plan.

3. Choose a savings plan with an investment strategy to suit your circumstances.

There are many ways to save for your child’s future, each with their benefits and shortfalls:

A. Bank Accounts

Traditional bank accounts provide easy access to the money whenever you need it with very low risk. However in return for this accessibility and low risk, the returns you get are traditionally lower than other types of investments and might not keep pace with inflation.

B. Investment Linked.

History shows us that equities (shares in companies) have in general given better returns over the longer term than other types of investments. However whilst the returns are potentially greater there is a higher degree of risk. The recent market volatility has led to many investors preferring safer more secure types of investments.

C. Life Insurance Savings Plan

Most Life Insurance Companies offer Endowment Savings Plans which can be used for children’s savings. They aim to beat the returns available from traditional bank savings and deposit accounts whilst removing the volatility associated with stocks and shares.

They work by smoothing investment returns over the medium to long term through a system of regular bonuses, which once declared are guaranteed, thereby providing a more predictable and secure return.

4. Develop a regular savings habit

Unless you have a large sum to invest, a good way to build up significant savings for your children over the years is to start a regular monthly savings plan. Putting money aside in a regular savings plan could quickly become a habit and is a useful way of being disciplined about saving for your children’s future – you will soon start thinking of your regular payment as an essential part of your budget.