Investing for children

No parent will need reminding children cost money.

Many parents or grandparents are in the fortunate position to be able to save for their family and so often need advice on what may be the most suitable route.

With so many options available, where do you start?  A bank account, Junior ISA, Child Trust Fund or shares, to name a few?  Protection from inflation also needs to be considered.

Your timeline is very important.  A savings account for a toddler has a longer time horizon, and maybe you could afford to take more risk.  On the other hand, putting money aside for a teenager will probably need more security, and may be better suited to a deposit account.  Your attitude to risk will probably drive the most suitable investment.

Here are some considerations:

  1. Use personal allowances – the child will be able to earn £8,105 free of tax (2012/13).
  2. Are Junior ISAs or Child Trust Funds suitable?
  3. Trusts – these may provide the saver with more control over the investment.
  4. A pension contribution for the child may be desired.
  5. Friendly Society savings bonds may offer a suitable solution.
Please feel free to download the ‘Investing for Children‘ guide.  It contains plenty of information on what you should consider when investing for a child.
If you require advice on savings for a child, feel free to call on 01554 770022 and we can arrange a no obligation appointment.

Junior ISAs explained

Junior ISAs will become available from 1st November 2011 and will hold some tax-free benefits. Junior ISAs may be a great way to plan university fees, or simply to provide your child or grandchild a good financial start to adulthood.

Parents or grandparents may be able to find a tax-free way to save for the future of their children or grandchildren.

The Junior ISA is a tax-free savings account for children. However, unlike the Child Trust Fund account (which has been closed to children born on or after 3 January 2011), the government will not make any payments into the new accounts.

You will be eligible to open a Junior ISA if the child does not already have a Child Trust Fund. Broadly, this means any child born before 1st September 2002, or after 2nd January 2011.

You will be able to save up to £3,600 per annum for the child, and your choice of investments will include cash deposits, and will also allow access to stocks and shares. A child can have both cash and stocks and shares Junior ISAs. The investment will become available to the child on attaining age 18.

Always seek advice if you are unsure on what are the most suitable options for your savings. A well structured and diversified portfolio will not only reduce the risks of exposure to one asset class, but also provide greater growth potential over the longer-term.

Should you need independent financial advice on your Junior ISA options, and live within 30 miles of Llanelli, please call Financial Solutions Wales on 01554 770022.