Making up for a lack of inheritance

Destined to inherit the Duchy of Cornwall, and eventually succeed to the Crown, the young prince is likely to have a rather unique set of financial issues to worry about.

For the vast majority of the population, life is likely to be a little more prosaic. But with some forward thinking, experts suggest that those born today can expect to have a solid financial future, as long as they start early.

The most important aspect to think about is how long the little one is likely to live. According to the department for work and pensions, over a third of people are expected to live to be 100 years old, while the average life expectancy is 90.9.

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This is a big jump, even from Prince George’s father, Prince William, when average life expectancy was 85.2 years at birth for a boy, and a 19.5 per cent chance of living to 100.

But children born at the time of the young prince are much further out in front than babies born at the time of his grandfather Prince Charles, when boys born at the same time as him had an average life expectancy of 77.4 years.

So the young prince can expect to live a long life - especially given his fortunate socio-economic circumstances. And so can many other babies born at the same time, but those born without a royal inheritance would benefit from having parents thinking about their financial futures.

The first thing at the top of the list should be to invest in a Junior Isa. A parent or guardian can open an account for children under the age of 16, and can invest in a cash or a stocks and shares Isa (or both) for the child.

A maximum of £3720 can be invested in the Isa account annually, and the child can only access this money once he or she hits the age of 18.

According to London-based investment manager Brewin Dolphin, if parents and grandparents were to invest £300 a month - almost the maximum allowed a year for a newborn child, when they reach 18, the Isa could be worth £112,280, assuming the fund grows at 7 per cent a year and inflation is 2.5 per cent. This would amount to £72,770 in today’s money.

Another option is for parents to start thinking of the child’s pension. If parents and grandparents invest £300 a month into a stakeholder pension, the child could have a pension fund worth £1.67m by the time he or she reaches the age of 55 in 2068.

This could provide an income of £17,800 a year, or £13,300 with a tax-free cash sum of £107,000.

However, it could be just as important for the parents to start saving when planning for a baby. According to LV=, it now costs £222,458 to bring up a child to the age of 21, and this could go up to £350,000 by 2023.

Education and childcare are the biggest expenditure for parents; the cost of education has soared from £32,593 10 years ago to £72,832 this year, a rise of 123 per cent. Furniture has also risen in cost by 66 per cent to £3462 over the last 10 years, while pocket money has jumped 31 per cent over the same period to £4458.