What are the best options for Investing for Children?
There are so many options in the investment world and many aimed specifically for investing for children and indeed investing in the children’s names.
How do I make sure I choose the right product?
Anyone can start investing for children, whether parent, grandparent, aunt, uncle, or family friend. Whether you wish to invest a lump sum, regular sums, or both, there are many options available to you.
The main considerations that influence the most suitable method are as follows:
- How much you are looking to invest
- Taxation whilst the monies are invested
- When, or if, you wish your children to have access to the monies
Child Trust Funds
In 2008, the government closed the door on Child Trust Funds. This meant that no new Child Trust Funds could be opened, but those parents who had children that they had opened accounts for could continue to make contributions into the accounts. The maximum contribution was £3,720 per annum, all income and growth on the fund is tax-free and the child will become entitled to the money at age 18.
Junior Individual Savings Accounts
Following removing Child Trust Funds, the government wished to continue to allow parents a tax efficient way of investing for children and introduced Junior Individual Savings Accounts (JISAs).
Anyone under the age of 18 living in the UK that doesn’t have a Child Trust Fund, can open a Junior ISA, or have one taken out for them. Like ordinary ISAs, your child can have a Cash JISA, Stocks and Shares JISA, or both. All income and growth is completely tax-free.
Children between 16 and 18 can open their own accounts and those younger will need a parent or guardian to open an account.
Once aged 16, your child can open a regular Cash ISA.
Upon reaching age 18, JISAs will be changed to regular ISAs and the child will be fully entitled to the full value of the accounts.