The money tip that could help build grandchildren £112,000 nest eggs

Life is becoming untenably expensive. What once seemed like standard milestones – buying a home, learning to drive, going to university – seem to be slipping more out of reach.

In 2025, the median home in England cost 7.6 times the average annual salary. In the 1970s, the ratio was 3.5, according to Nationwide. Today, a single driving lesson costs up to £40 an hour, while university – once free for the generation that introduced the fees – now costs £9,780 annually, excluding the potential extra burden of £10,000 maintenance loans.

Struggle is relative, I know, and no era has come without its own hardships, but there has been a stark shift in affordability. In view of this, I’ve recently come across a few people looking for tips on building a nest egg for their grandchildren to help give them a bit of a head start.

Firstly and most simply, you could open a savings account for them. This is much better than just handing them money, as some accounts offer decent returns – effectively a free cash boost. Banking providers offer savings accounts that grandparents can contribute to, and some have particularly competitive rates. For example, Kent Reliance offers 4.18% AER on savings up to £25,000, while Yorkshire Building Society offers 3.55% AER on up to £100,000 (at the time of writing).

Junior ISAs (JISAs) are another popular route, and could garner much larger returns depending on the type you open. You can save up to £9,000 in a JISA per tax year. A parent or guardian must open the account, after which anyone can contribute, including grandparents. Investments grow tax-free, and the funds become accessible to the child when they turn 18.

Investing £3,000 per year for 18 years in a Junior Stocks and Shares ISA could turn a £54,000 contribution into £112,000, assuming 8% annual growth minus fees. In a medium-growth pot of 5%, the same contribution would accumulate around £80,000, according to experts at Fidelity, which is more than enough for a house deposit, a first car, or even to cover university fees entirely.

You can also open a normal Junior Cash ISA if you’re uncomfortable with investing, but it must be noted that returns may be lower. With this in mind, make sure to open a top-paying account to get the most out of it.

You can see a list of Junior ISAs currently on MoneySuperMarket.com, or for an account comparison, check out MoneySavingExpert’s website.

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The five minute switch that can earn you hundreds of pounds

On the subject of savings accounts, experts have been upping the ante to encourage Brits to review their interest rates. A comparison of the top and bottom-paying easy-access accounts shows a noticeable 3.5% gap, with high-paying accounts offering as much as 4.3% compared to just 0.75%.

Putting the losses into context, calculations from wealth management firm Hargreaves Lansdown showed that holding £1,000 in a 0.75% interest account would earn you £38.20 after five years. The balance would grow by just £119.03 after 15 years.

Meanwhile, a savvy saver who takes five minutes to review and switch savings accounts to the higher paying 4.3% deal would earn an estimated £239.39 after five years, or £903.79 after 15 years.

For people considering stocks and shares accounts, the returns are even higher. I spoke to experts at the savings app Plum this week, who told me their new research showed the average person is keeping £22,431.80 in cash savings. If invested in a global balanced portfolio, they said this sum would be worth around £32,099.91 in five years' time based on historical returns, compared to just £26,581.68 in an average savings account paying around 3%.

As with all stock market-based investments, your capital is at risk, and your money can go up as well as down. But these accounts are intended for long-term saving, and more often than not, the market will even itself out. For tailored support, independent financial advisors (IFAs) can be found on unbiased.co.uk.