Invest for your children to help give them a better start in life
We believe one of the greatest gifts you can give your children or grandchildren is to save for their future. Whether you have a goal to support them through university, help them to buy their first car, or give them a step up onto the housing ladder, providing financial help could help give them a better start in life.
Our expert financial advisers are here to help you save for the future of the next generation.
£59,000 is the average first-time buyer deposit in the UK*
£56,000 is the average cost of going to university in the UK+
The earlier you start investing for children, the greater difference you can potentially make
Making a decision to save for your children or grandchildren is easy, the difficult part is choosing the best way to do it.
One thing’s for sure; the earlier you start saving, the better. And there’s no time like the present.
As well as helping your loved ones at key milestones in their life, you could also reduce the amount of inheritance tax that might need to be paid in the future.
So, which account is best to set up for your child? At Schroders Personal Wealth we can help you to choose the right solution which aims to build a nest egg for your children which they’ll thank you for in years to come.
Tax treatment depends on individual circumstances and may be subject to change in the future.
*Source: Halifax, February 2021
+Source: National Student Money Survey 2020
Investing for your children’s future, today
Setting up your children's finances
There is no right amount for how much to save for your children’s future.
Even if you don’t have a huge lump sum today, don’t worry. You can set up an account with regular monthly payments from £250.
As your child enters their journey into adulthood, they will no doubt encounter financial challenges. With the money you have invested on their behalf you could potentially support them through their journey and open up more opportunities for them in the future.
Make a difference to your child’s future
There are limits to the amount you can save for your children or grandchildren per year. For the 2021/22 tax year:
JISA - the maximum you can invest is £9,000. Anyone can pay into the account, but the payments must not exceed £9,000 this tax year.
Junior SIPP – the maximum you can invest is £2,880. The Government then top this up with 20% tax relief of £720, making up the £3,600 annual limit.
Our expert financial advisers can help you to invest for children
Junior ISA (JISA)
A JISA is designed for those under the age of 18 and just like an adult ISA, any potential income and capital growth are free of tax. Once you open the account for your child, anyone is able to contribute building up a significant nest egg.
Junior SIPP
A Junior SIPP (Self-Invested Personal Pension) could give your child a head start in saving for their future. As the money cannot be accessed until retirement age, your investment has plenty of time to potentially grow, although this is not guaranteed.
Trusts
Making gifts to a trust can allow you to give money to your children or grandchildren at the appropriate time, preventing them from being able to dip into their savings. So you can gift money to your family, whatever their age.
Tax treatment depends on individual circumstances and may be subject to change in the future.
Pensions are a long-term investment. The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed and can do down as well as up. The benefits of your plan could fall below the amount(s) paid in.
The difference between Junior ISAs and Junior SIPPs
Are you financially prepared for the unexpected?
We believe having the right protection in place is the cornerstone of a holistic financial plan, yet is a need that is often overlooked. Having a financial safety net in the form of protection products could provide valuable peace of mind should the unforeseen happen.
Understanding more about investing for children: Wealth lens
JISA: The perfect gift
A Junior Individual Saving Account (JISA) can be a great way to introduce children to the value of savings and investments at an early age. You can save up to £9,000 per tax year per child. Anyone can pay into a JISA making it a great alternative to toys as gifts from loved ones at any time of year.
How can I help my grandchildren invest for their futures?
As a grandparent you might be thinking of how you could help out. In this article we look at some of the ways you could help provide a more comfortable life for the next generation.
Frequently asked questions about investing for children
What happens when my child or grandchild turns 18?
As well as teaching children about saving, investing and looking to the future, a Junior ISA could help them build some sizeable savings. Especially if you start early.
When your child or grandchild reaches the age of 18, their Junior ISA account will be closed and the holdings moved into an adult ISA account. At this point they can decide to leave their savings where they are, contribute to their ISA, or withdraw the money that has been saved.
Can I set up a JISA or Junior SIPP for my grandchildren?
Both Junior ISAs and Junior SIPPs can only be opened by the parent or legal guardian of a child under the age of 18.
However, once the account is open, anyone can contribute payments making them a great way for you to help your grandchildren save for their future.
What are the tax advantages of investing for my children or grandchildren’s future?
You can make sure you don’t pay more tax than you need to at the same time as saving for your children or grandchildren’s future.
Junior ISAs are a great way to save tax-efficiently as there is no Income Tax or Capital Gains Tax to pay on the interest or investment gains.
You can also save for your child’s future retirement tax-efficiently with a Junior Pension.
Each tax year the Government automatically tops up any contribution by 20% of tax relief. When your children or grandchildren retire, they should be able to take up to 25% of their pension fund as a tax-free lump sum.
Tax treatment depends on individual circumstances and may be subject to change in the future.
Let's start with a free initial consultation
We'll begin with a free, no obligation conversation to understand if our service is right for you. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.