How to invest for your child
Whether you have a child or grandchild, safeguarding their future and giving them the best start in life is all any parent or grandparent wants to do.
Putting money aside for your child’s future will not only bring you peace of mind but, if you get them involved in the saving process too, it can also help to teach them valuable life lessons in managing their money. You’ll also know that once they grow up they will have money put aside to put towards the next step in their life.
Whether it’s a lump sum investment or monthly savings for the longer-term, we’ve put together our top tips on how to invest for your child as well as considering the most effective way you can go about saving towards your child or grandchild’s financial future with us.
Why it’s worth investing for a child
There are several reasons why it is worth investing for your child’s future. Making financial investments for your child can:
- Help to give them financial support for the adult years ahead
- Provide a cash sum when they need it the most
- Give you peace of mind that they have savings growing as they do
- Teach them life lessons in money management
- Help them buy their first car, pay towards university fees, or even help with a deposit on their first home.
Are savings and investments for a child subject to tax?
According to HMRC, there is usually no tax to pay on children’s accounts.
However, a parent or grandparent should inform HMRC if, in that tax year, the child receives more than £100 in interest from money given by a parent. This is known as a £100 limit and doesn’t apply to:
- Money in a Child Trust Fund or Junior ISA
- Money given by grandparents, friends or relatives
The parent will also have to pay tax on all the interest if it is above their own Personal Savings Allowance – an allocated amount of interest depending on your tax band that you don’t have to pay interest on.
What investments can I make for my child?
Providing for your little ones is so important – it opens a whole host of opportunities for them once they have grown up and gives you peace of mind that they have that financial boost to help get them started.
Children’s Tax Exempt Plan
This type of plan offers an affordable option for you to invest in your child’s future and give them a head start in life.
Can I invest on behalf of my grandchild?
The short answer is, yes!