If you are soon to become a father, then you will probably be thinking about how to fund major expenses in your child’s future, such as sending them to university or paying for their wedding. The best way to do this is to start saving regularly from as early as possible, as the interest earned upon interest, known as compound interest, can really add up over a period of twenty years or so. While you may be tempted to start putting money into a stock market fund, in order to get the best returns, these carry an element of risk that you may not feel comfortable about taking with your child’s future. If you want decent returns without any risk, then high interest savings accounts would seem to be your best option.

You can set up a high interest savings account in your child’s name, or in your own name. If you set it up in your child’s name, then the interest on the balance will be exempt from capital gains tax, which means that the account will earn more interest overall. It might be an idea to set up an account that they cannot withdraw money from until they reach a certain age, such as 18 or 21. However, if you do this, you run the risk that they will squander the money as soon as they are allowed to withdraw it. For this reason, it might be a better idea to set up an account in your name, or a joint account with your partner, so that you can control how the money is spent to a certain extent.

You may find that you can get a better interest rate if you go for an account that has a long withdrawal notice period, such as 90 days, or a minimum monthly deposit. Accounts with a withdrawal notice period, known as notice accounts, require you to give the bank or building society a certain amount of notice before you withdraw funds. While this may not be suitable for your own personal savings needs, it is perfect for a long-term savings goal such as your child’s future. Accounts that require a minimum monthly deposit are known as regular savings accounts. While these typically offer high interest rates, if you fail to make the minimum deposit on one or more occasions, then you may have to forfeit interest or bonuses on the account. With some regular savings accounts, the account will be closed if you fail to keep up with the payments, so if you were to find yourself out of work for spell, you might not get the best value from the account. For more information about savings accounts, visit the Santander website.