{"id":6523,"date":"2025-06-20T10:50:43","date_gmt":"2025-06-20T09:50:43","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/quilter\/?p=6523"},"modified":"2025-08-07T09:38:45","modified_gmt":"2025-08-07T08:38:45","slug":"an-introduction-to-investing-for-children","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/quilter\/2025\/06\/20\/an-introduction-to-investing-for-children\/","title":{"rendered":"An introduction to investing for children"},"content":{"rendered":"<div class=\"hd-block hd-block-table\">\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Whatever your goals for your child\u2019s future, investing offers the potential for strong returns, especially if you start early<\/td><td>It is normal practice for a parent to retain ownership of their child\u2019s investment in some capacity until they are older<\/td><td>Sound professional advice will help you achieve a balanced portfolio aligned to your risk and avoid any potential pitfalls<\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h2 class=\"has-x-large-font-size\">Contents<\/h2>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li><a href=\"#assess-your-objectives\">Assess your objectives<\/a><\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li><a href=\"#making-an-investment-plan\">Making an investment plan<\/a><\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li><a href=\"#choosing-the-most-suitable-investment\">Choosing the most suitable investment<\/a><\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li><a href=\"#top-tips-for-maximum-tax-efficiency\">Top tips for maximum tax efficiency<\/a><\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>We all want our children to have the best possible start in life \u2013 but providing such a start is becoming increasingly expensive. A private education, university fees, wedding costs and property deposits all largely require parental assistance for younger generations, with high living costs and commensurately lower salaries making saving difficult. Whatever your goals for your child\u2019s future, investing offers the potential for strong returns, especially if you start early. While it is by no means guaranteed, data<sup>1<\/sup> shows that investments have historically performed better than savings over the longer term.<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h2 class=\"has-x-large-font-size\" id=\"assess-your-objectives\">Assess your objectives<\/h2>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>The first step is to understand what you are investing for. For example, you might want to:<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>Pay for your child to be privately educated, which costs on average \u00a35,218 per term for day students and \u00a312,344 per term for boarders<sup>2<\/sup><\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>Assist with university tuition fees (up to \u00a39,535 per year for most courses) plus living costs (\u00a34,914 for an average 39-week rental contract)<sup>3<\/sup><\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>Contribute to or pay for your child\u2019s wedding (just over \u00a320,755 on average for a UK wedding)<sup>4<\/sup><\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>Help them onto the property ladder (the average first-time deposit is now \u00a353,414)<sup>5<\/sup>.<\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>It may seem early to think about retirement provision, but given the average State Pension is currently around \u00a312,000 per year, many parents are also thinking about this aspect of their child\u2019s future.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h2 class=\"has-x-large-font-size\" id=\"making-an-investment-plan\">Making an investment plan<\/h2>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>If you are looking to help your child with these types of expenses, there are many investment options to consider. However, any investment plan should revolve around these two major principles:<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>The longer the timescale, the more scope there is for your investments to grow<\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li>Sound professional advice will help you achieve a balanced portfolio aligned to your risk profile, and avoid any potential pitfalls.<\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Your plan will also include aspects such as:<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>Who will hold the investment?<\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li>Choosing the most suitable investment<\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li>The right choice of product.<\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Who will hold the investment?<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>It is normal practice for a parent to retain ownership of their child\u2019s investment in some capacity until they are older. As a general rule, children under 18 (16 in Scotland) cannot invest in their own name because they do not have the legal power to either make a valid contract with a provider or manage it on an ongoing basis.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>The simplest, and most flexible, way to get started is to simply invest money in your own name, knowing that this sum is earmarked for your child. This has its own disadvantages, however, including that you may have to pay Income and\/or Capital Gains Tax on the investment, and that your estate may be liable for Inheritance Tax (IHT). Another option would be to place the funds into a designated account or a trust on their behalf, which would help to minimise your tax liability. Both of these options will hold the funds for your child either until they reach 18, or another specific milestone (which would, for example, be set out in a trust deed).<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h2 class=\"has-x-large-font-size\" id=\"choosing-the-most-suitable-investment\">Choosing the most suitable investment<\/h2>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Choosing an investment for your child is little different to selecting the most suitable investment for yourself. Whether for yourself or your child, an investment should always:<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>Be aligned with the level of risk you\u2019re willing to take<\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li>Work towards a specific goal or goals.<\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>This will ensure you understand what you need your investment to deliver, and by when, in addition to the level of risk you\u2019ll need to take to achieve your desired returns. As with any investment, a professional financial adviser is best placed to advise you on these factors, as well as help you allocate your investment to the most suitable assets and funds.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">The right choice of product<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Once you have selected the most suitable investment for the agreed risk profile, objectives and timeframe, the final step is to decide on the most suitable product, or \u2018wrapper\u2019, depending on your individual circumstances and tax situation.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Junior ISAs<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Any child under the age of 18, and who lives in the UK, can have a Junior Individual Savings Account (JISA).<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Like adult ISAs, there are two types of JISA: cash JISAs and stocks and shares JISAs. The maximum you can pay into either type tax-free is \u00a39,000 for the 2024-25 tax year. Income and gains from a JISA are free of UK tax and not subject to parental tax rules.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Note that children can gain control of a JISA at 16 but usually can\u2019t withdraw anything until they\u2019re 18.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Child Trust Funds<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>These are no longer available (they were replaced by JISAs), but you can still pay up to \u00a39,000 per year into an existing CTF account, which your child can access on their 18th birthday.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Personal pensions<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>You may think your own pension is a world away, let alone your child\u2019s. However, if you\u2019re looking to secure your child\u2019s financial future in the long term, you may wish to consider opening a Junior Self-Invested Personal Pension (SIPP). Junior SIPPs are eligible for 20% tax relief; the maximum you can pay in per year is \u00a33,600 (i.e. \u00a32,880 with 20% tax relief).<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\"><strong>Premium bonds<\/strong><\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>You can purchase between \u00a325 and \u00a350,000 worth of Premium Bonds from National Savings &amp; Investments on behalf of any child under the age of 16. Instead of earning interest, you are entered into prize draws with the chance of winning tax-free sums of between \u00a325 and \u00a31m. If your child wins a prize, it will either be paid into the nominated parent\/guardian\u2019s bank account on the child\u2019s behalf, or it can be reinvested into more Premium Bonds.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Trusts<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>As previously mentioned, you can hold investments in trust on a child\u2019s behalf. Unless the trust deed states otherwise, trustees can generally invest in any asset they choose. However, they must abide by the rules set out in the Trustee Act 2000:<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-list\">\n<ul><div class=\"hd-block hd-block-list-item\">\n<li>They are required to ensure that any investment made is suitable, as well as su\ufb03ciently diversified<\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li>They have a duty to obtain and consider proper advice from somebody who they reasonably believe is qualified and competent to give such advice on such matters<\/li>\n<\/div>\n\n<div class=\"hd-block hd-block-list-item\">\n<li>The investment should not interfere with the trustees\u2019 statutory duty of care under the Act.<\/li>\n<\/div><\/ul>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>There are a great many types of trust, the tax treatment of which varies widely.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><sup>1<\/sup>Barclays, 2024, <sup>2<\/sup>Independent Schools Council, 2023, <sup>3<\/sup>Times Higher Education, 2023, <sup>4<\/sup>Bridebook, 2024,<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><sup>5<\/sup>Halifax, 2024<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h2 class=\"has-x-large-font-size\" id=\"top-tips-for-maximum-tax-efficiency\">Top tips for maximum tax efficiency<\/h2>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Take full advantage of tax-free allowances<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>As we have seen, JISAs and Junior SIPPs will enable you to invest a set amount each year, without either a) incurring tax on interest or gains or b) losing valuable tax reliefs. It is therefore advisable to take maximum advantage of these allowances before moving onto other types of investments that may incur tax.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Hold the investment in a bare trust<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>This is a type of trust that taxes investments as if they belong to your child, and not to you. Be aware that once you name your child as a beneficiary, this cannot be reversed and they will have an absolute right to both the trust\u2019s income and capital once they are old enough to take ownership. Like adults, children have a personal tax-free allowance of \u00a312,570 (2025-26 tax year), in addition to the savers \u2018starter rate\u2019 of up to \u00a35,000 and a personal savings allowance of \u00a31,000 (different tax allowances apply in Scotland). Altogether, children can \u2018earn\u2019 up to \u00a318,570 a year tax-free, which will cover their yearly income from investments in most situations. Similarly, children have a Capital Gains Tax allowance of \u00a33,000 per year before they have to pay tax on investment profits.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Take advantage of the \u2018Double ISA\u2019 loophole<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>As your child gets older, they will become eligible for an ISA, while still retaining their JISA. Children aged 16 and 17 can open a cash ISA (but not a stocks and shares ISA), which comes with a tax-free allowance of \u00a320,000 annually (202-26 tax year). This gives parents two years to deposit up to \u00a329,000 per year tax-free across the two accounts.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h3 class=\"has-large-font-size\">Benefit from lifetime gifting<\/h3>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>Gifts of money do not incur IHT if the donor lives for seven years after gifting. Lifetime gifting is a good option for grandparents, for example, who wish to contribute financially to their grandchildren\u2019s future while reducing the value of their own estate for IHT purposes.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-heading\">\n<h2 class=\"has-large-font-size\"><strong>We\u2019re here to help<\/strong><\/h2>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>As with any form of financial planning, the earlier you begin planning for your child\u2019s future, the better. Whatever your objectives may be, seeking financial advice now will help you identify what you can afford to invest without compromising your own financial security, the level of risk you\u2019re willing to accept, and the balance of assets and funds that best aligns with your risk profile and timescales.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>We can help you develop a robust investment plan and regularly review it to ensure your portfolio is still working hard for you as the years go by and your circumstances change. Please get in touch to start your investment journey and give your child a brighter future.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-spacer\">\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice, and certain forms of estate planning.<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>We\u2019re only a phone call away, so if you have any questions or would like to discuss any aspect of investing for children, then please do get in touch.<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.<\/strong><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Whatever your goals for your child\u2019s future, investing offers the potential for strong returns, especially if you start early It is normal practice for a parent to retain ownership of their child\u2019s investment in some capacity until they are older Sound professional advice will help you achieve a balanced portfolio aligned to your risk and [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32],"tags":[86],"hd_content_source":[],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/6523"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/comments?post=6523"}],"version-history":[{"count":4,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/6523\/revisions"}],"predecessor-version":[{"id":6889,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/6523\/revisions\/6889"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/media?parent=6523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/categories?post=6523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/tags?post=6523"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/hd_content_source?post=6523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}