Saving and Investing for Children in UK
Expert Financial Advice For Investing in Your Child's Future
All parents want to give their child the best possible start in life. Investing a lump sum or small amount each month as soon as you are able to start will give your child a great start. The money could be used to help with university fees, pay a deposit on their first home or buy their first car.
Below are a few possible options for saving and investing for your child’s future. It is important to remember that the best option for you and your family will depend on your individual circumstances. At Four Wealth Management, we provide individual tailored financial advice to help you determine the best way to maximise the amount you save for your children.
Junior Stocks and Shares ISA
Some parents or grandparents prefer the certainty of saving cash into a bank account, however the reality is that these savings will be losing value in real terms as inflation rates are much higher than savings account interest rates.
This means parents have to consider other options to make their money go further. Investing into a Junior Stocks and Shares ISA is an option for this. You do not need to worry about choosing which investments are suitable for your child as a financial adviser at Four Wealth Management will recommend the best portfolio to help your child make the most of their money.
Saving a small amount each month or year can provide your child with a sizeable amount in the long-term. The longer the money is invested, the more chance it has to benefit from compound interest which is where the assets grow over time.
A Junior ISA must be opened by a parent or guardian but once it has been opened, anyone can contribute up to a total of £9,000 per tax year. YThe same as adult ISAs, any growth in value in a Junior Stocks and Shares ISA is free from UK tax.
Book a no-obligation meeting to discuss opening a Junior ISA
The value of an ISA with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a deposit account from a bank or building society.
The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.
Junior Pensions
It may seem bizarre to be thinking about your child or grandchild’s retirement, however if you are looking to plan for the long-term a tax-efficient way to save for your child’s future is by opening a Junior Pension. The same as an adult pension, Junior pensions are eligible for 20% tax relief.
Parents or grandparents can save up to £2,880 a year into a child’s pension, this is automatically topped up to £3,600 with tax relief.
It is important to note that from 2028 private pensions cannot be accessed until age 57 so it is important that your child will not need to access these funds before this.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Trusts
There are various types of trust. This is where the parent or grandparent or other family member places assets into a trust. The person who puts the assets into trusts nominates a trustee to manage those assets on behalf of your child or children who are the beneficiaries of the trust.
There are many different types of trust.
A financial adviser at Four Wealth Management can let you know the most tax-efficient option for you to leave assets to your children. Some trusts fall outside of your estate for Inheritance Tax purposes.
Book a no-obligation meeting now to discuss setting up a trust
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Trusts are not regulated by the Financial Conduct Authority.
Protect your family’s future
No parent wants to think about dying and leaving their parent behind. However, it is important to prepare for the unexpected just in case.
Many parents assume life insurance will be expensive, however the younger you are when you take out the policy, the cheaper the monthly premiums will be.
Life insurance provides security for your family and peace of mind for parents. You will know that if the worse happens, your children can keep your family home and will not be responsible for paying off any existing debts you have. Life insurance policies typically pay off any remaining mortgages, funeral costs, any outstanding debts and some provides an inheritance for your children.
There are many different types of cover offered, a financial adviser at Four Wealth Management can make sure you have the correct cover in place to protect your family’s financial future.
Our financial advisers can come to your home address for a meeting, or you can meet at one of our offices in Bristol, Cirencester, London or Cardiff. Alternatively meetings can be on zoom. All meetings can be on a day/time that works for you. Book a meeting online now or call us on 0117 973 0500.
Book a no obligation meeting
If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.
