Make your child a millionaire

More than half of UK children believe they will become a millionaire one day. Here's how to make sure your child doesn't grow up with the crushing disappointment!

This classic lovemoney.com article has been updated for 2010. 

In the midst of a recession, our kids remain undaunted. Although only 0.5% of the nation is currently a millionaire, 51% of our six to 10-year olds believe that they will manage it.

Go kids!

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The kids are right

Now you might expect me to embark on a rant about the UK's ugly material values and the inflated financial expectations we give our kids, but I'm not going to do that.

Kids are right to want to be millionaires, because I imagine (and sadly, I can only imagine) that a millionaire is a very useful thing to be. A lot of my day-to-day worries could be solved by the swift injection of a seven-figure sum, such as deadlines, the cleaning, our conked tumble dryer and drafty windows.

Millionaires don't have to worry about these things, and kids know that. They're not stupid.

Parental duty

And I don't see why parents can't give them a helping hand. All must have prizes, and if the prize just happens to be a million pounds, then surely it is the duty of every modern parent to supply it.

Here are some tips and ideas to make sure your child doesn't grow up with the crushing disappointment of not being a millionaire.

Hand it over

Of course the easiest way to make your child a millionaire is to simply give them a million pounds. As Winston Churchill said, saving is good, especially if your parents do it on your behalf.

So come on mums and dads, cough up!

In the entirely possible event that you don't have a million pounds in ready cash, you need to draw up a strategy to GET THAT CHILD A MILLION.

Here are some suggestions:

Die

Get your house valued. Is it worth a million pounds? If so, then your child's path to riches is wide open. In fact, only one thing stands in their way: You.

You don't have to die immediately. You might want to wait until they're 18, and a little more fiscally responsible, before you pop off.

And if you have more than one child, or for some astonishing reason your house isn't worth a million (should have moved to London!), you might want to leave it a little longer.

Parenting is all about making sacrifices, and this is the ultimate, after all.

You know they're worth it.

Not altogether sure this is a good idea? Well, if you're not willing to die to make your children rich, then you will be encouraged to hear you have other options, too.

Work

The easiest way to make your child a millionaire is to be one yourself. Set up your own business, work every hour God sends, and with a little luck and a lot of application, you could one day be worth a pleasing seven figures.

Your kids will thank you for it, and if you're lucky, they might even join the family business to keep it going. Given the state of the job market, they may have little alternative.

So, when you get up for work tomorrow, decide to become a millionaire. You owe it to your child.

Play

Play the lottery. Duh!

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Save

I've done some number crunching here, and I've worked out that it is possible to make your child a millionaire by saving, provided you start early and put aside a lot of money every month.

If you save £1,350 a month for 25 years, and earn an average compound interest rate of 7% a year, you will accumulate £1,063,485.

If you think 25 years is too long to wait for your child to become a millionaire, and 18 would be fairer, you will have to save £2,500 a month.

That is actually less than I would have expected, but there are one or two provisos. First, you may have more immediate uses for that money. Such as food.

These figures assume you start saving the moment your kids are born, and also ignore the wily taxman, who will take a fair chunk of your annual growth, especially after the anticipated demise of the tax-free child trust fund (CTF). Outside the CTF, only the first £100 of interest on a child savings account is tax-free. The rest is taxable on the parents.

So you might need to pay in a lot more.

But again, are your kids worth it? Of course they are.

Plan

There is a more affordable way to make your children millionaires, but inevitably, it will take a lot more time. About 55 years.

You can take out a pension on your child's behalf, and invest £3,600 a year. If save £150 a month from birth and continue saving right through your child's adulthood, they will have £1,075,978 by age 55, which is the earliest you can draw a private pension.

Better still, you can claim tax relief on your contributions, and there is no annual tax bill on the growth. Your kids will have to pay tax when they draw the income, but that's their lookout.

They have to do something for themselves, and age 55 is a good time to start.

Start now

I'm sure there are plenty of other ways of making your little adorables the million they surely deserve.

So come on, it's your duty as a parent.

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