Investing for Grandchildren

Investment Ideas for Grandparents

Investing for grandchildren is often a high priority for grandparents who wish to give their grandchildren a head start in life.

It is only right that you want to help support your grandchildren financially when they go to university, get married or buy their first home.

 

The recent launch of the Junior ISA in November 2011 means that you can now invest for grandchildren tax efficiently up to £3840 pa per child. For more information see below:

Junior ISA Selection
ProviderJunior ISA ProviderRegular SavingsInvestment OptionsOnline ValuationsMore Info
Family Investments Junior ISAyesMake saving and investing for your child’s future simple with Family Investments. We won the award for Best Junior ISA Provider in the Moneyfacts 2014 Awards and are committed to convenience: manage your child’s Junior ISA with online account management or speak to someone in our friendly UK-based call centre. Please remember the value can fall as well as rise and your child may get back less than has been paid in.yesMore Info >
  • Invest up to £4000 per child, per year 
  • Invest from as little as £10 a month
  • Available for children under 18
  • Free Boots voucher when you apply and set up a Direct Debit of £10 or more (please see terms and conditions for further details)
  • Winner of the 2012 Moneyfacts Award for Best Junior ISA Provider 
  • Avaliable for children who did not qualify fro a Child Trust Fund account
  • Annual management charge 1.5%
  • The value of investments and any income can fall, so the Junior ISA could return less than you invest
  • Returns on investment funds are not guaranteed
Junior Stocks and Shares ISAyesChoose from over 2,500 unit trusts and OEICs from leading fund managers. Invest from £50 per month or lump sums of £500.yesMore Info >
  • Same tax benefits as an adult NISA - no capital gains tax, and no further tax to pay on income.
  • Anyone can contribute - useful for birthday and Christmas gifts.
  • Withdrawals possible from age 18.
  • Open with a lump sum from £500 to £4,000 or start a monthly direct debit from just £50 per month.
  • Free mobile app to deal shares, access prices, indices, news and research.
  • The value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. 
  •  If you’re unsure about the suitability, we recommend you ask for independent advice.
  • Tax rules can change and the reliefs depend on your child's personal circumstances. 
Fidelity Junior ISAyesOver 1200 Funds from over 70 Investment CompaniesyesMore Info >
  • Invest from £500 to £4000 pa per child
  • High Quality shortlist of leading UK Funds to choose from
  • Cash Options available
  • Fidelity are a leading UK ISA provider with over £34 billion under management
  • The value of investments and any income can fall, so the Junior ISA could return less than you invest
  • Returns on investment funds are not guaranteed
Shepherds Friendly Junior ISAyesA range of assets including UK and global shares, bonds and cashyesMore Info >
  • Invest up to £4000 pa per child
  • Invest from only £10 a month, or a lump sum from just £100 or a mixture of both
  • Available for children under 18, who do not already have a Child Trust Fund
  • Available for Junior cash ISA holders
  • The value of investments and any income can fall, so the Junior ISA could return less than you invest
  • Returns on investment funds are not guaranteed
Sippdeal Junior ISAyesA range of investment opportunities, including all the FSTE 350 companies.yesMore Info >
  • Invest either regularly or at any time up to £4000 pa per child
  • No minimum level of regular monthly subscriptions
  • Over 2,000 funds across UK and more than 20 overseas markets
  • The value of investments and any income can fall, so the Junior ISA could return less than you invest
  • Returns on investment funds are not guaranteed
Scottish Friendly My Select Junior ISAyesA range of assets including UK and global shares, bonds and cashyesMore Info >
  • Invest up to £4000 pa per child
  • Invest from only £10 a month, or a lump sum from just £50, or a mixture of both
  • Raise, lower, or stop and restart your payments any time you like
  • Available for children under 16, who didn't qualify for a Child Trust Fund
  • Available for Junior cash ISA holders
  • The value of investments and any income can fall, so the Junior ISA could return less than you invest
  • Returns on investment funds are not guaranteed

Investing for grandchildren can take a number of forms and can be either structured where the investments are specifically designated for the grandchildren or informal arrangements whereby investments already in place are potentially earmarked as gifts for grandchildren at a later date.

Examples of investments for grandchildren include:-

  • Junior ISAs
  • Bank, building society and Post Office deposit accounts
  • National Savings & Investment products such as Children’s Bonds and Savings Certificates
  • Unit Trusts
  • Investment Trusts
  • Child Trust Funds
  • Regular savings accounts

One of the benefits of children’s investments which are funded by contributions from grandparents is that any interest is assessed on the child who is then able to utilise their personal allowance and have the interest paid without deduction of income tax.

Interest in excess of £100 per annum earned by children from investments funded by a parent are assessed for income tax purposes as being the parent’s income and, therefore, subject to income tax.

When considering investing for your grandchildren, you should take into account:-

  • Whether you wish to make a one-off investment or have a regular monthly commitment.
  • At what age you would like your grandchildren to have the capital.
  • What is your objective for the capital – school or university fees or a deposit for a first home.
  • Do you want your grandchildren to have control over the investment or maybe a trust arrangement would be preferred.
  • The level of investment risk that you are willing to take.

There are, of course, other factors that need to be considered and if you are looking to invest either in some form of asset backed investment, such as a unit trust or investment trust, or feel that a trust arrangement would be suitable, you should consult an suitably qualified and impartial adviser who will be able to help you in establishing the most suitable investment scheme for you and your grandchildren.

 Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.