Kids, eh? Quite lovable, if you like that sort of thing, but they certainly do not come cheap. It is only a matter of time before the national newspapers, which apparently cannot get enough of this breed of story, are given the ammunition – perhaps through misreading this very sentence – to trumpet how it now costs an average of £1m to raise a child in the UK.
OK, so according to the annual Cost of a Child study released earlier this year by the good, good people of LV=, the real figure currently stands at just the £201,000 from birth to 21 but that still works out – Control + C, Control + V – as £9,610 a year, £800 a month and £26 a day. What’s more, with the child trust fund scheme effectively being scrapped as of next January, parents are going to have to manage without the whole £500 they would have received during their child’s first seven years.
Yes, when I put it like that, I suppose it does not look terribly much and, of course, the CTF was poorly designed – a complete absence of control over the investment when their kid turned 18 cannot have been much of an incen-tive for parents – and lousily executed. Nevertheless, the scheme had its heart in the right place and surely it scores a point or two for that.
Mind you, I appear to be in a minority in feeling even a little sadness at the CTF’s passing. According to a Baillie Gifford survey, more than half of the country’s parents and grandparents agree with the Government’s decision to can the scheme and it is unlikely the fund management sector will be unhappy to see the back of it either.
Barely any of their number deigned to involve themselves with CTFs. Naively perhaps, I had thought fund groups might be grateful for the reasonable percentage of little pots of money that apathy would almost certainly ensure stayed on their books 18 years or so down the line. Still, lucky investment isn’t about the long game, eh?
I have already used my day job to suggest that advisers take advantage of the heigh-tened awareness of the need to save for children generated by the CTF’s demise and, more broadly, higher-rate taxpayers losing out on child benefit. Indeed, as luck or possibly even good planning would have it, www.marketing-hub.co.uk has created a saving for children pack to send out to clients as a way of focusing their minds on the future.
I’ll tell you a few people who could use a pack for starters – the godparents of my daughter, who is christened this weekend. This will sound terribly ungrateful – although fortunately none of the quartet reads Money Marketing – as I know in advance how generous they at least claim they are going to be. But what is this obsession with premium bonds and, worse still, child-specific savings accounts?
What is wrong with, let us say, “grown-up” investments? We are talking some 20 years of potential growth here, which even fund groups might accept counts as long term for investors, if not for their own business planning purposes.
Surely this calls for a nice emerging markets fund and, no, despite the egregious plugging of a certain book over the last month or so, I have not gone native. In fact, my daughter does not even need an emerging market-specific fund as most equity portfolios should be able to enjoy this particular party.
Schroder’s Virginie Maisonneuve recently told me how her global alpha plus fund is playing what she calls the “supercycle” theme, which focuses on the role that the bigger emerging markets – China, India, Brazil and, increasingly, Africa – play in the global economy.
She says: “This is not just about urbanisation leading to an increase in the middle classes and infrastructure spending, which has an impact on commodities and resources – it is also about their increased geopolitical importance.
“How does the theme support the earnings’ growth of companies in the US, in India, in China, in Germany, in Japan, in Turkey – all over – that will benefit?”
Here’s hoping that this “junior Isa” idea, should it ever materialise, is attractive and well structured enough at least to capture the imagination of our next round of godparents.
Julian Marr is editorial director of www.marketing-hub.co.uk and www. thoughtleadershiplive.com