Investing for Grandchildren

Investment Ideas for Grandparents

Junior ISA Selection
ProviderJunior ISA ProviderRegular SavingsInvestment OptionsOnline ValuationsMore Info
Forester Life Junior ISAyes0% charges for the first year, making it one of the best value actively managed Stocks and Shares Junior ISAs on the market so more of what you save is invested for your child. yesMore Info >
  • Professionally managed – savings are balanced between stocks and shares and fixed interest holdings by the experienced fund management team at Schroders
  • Apply, top up and manage your child’s Junior ISA online.
  • Flexible – It’s up to you. Save as little as £10 a month, make single contributions – or both; up to £4,080 this financial year.
  • Clear, low capped charges – The only charge is an annual management charge of 1%, and 0% for the first 12 months. Unlike some other providers, we don’t charge entry, exit or transfer fees.
  • Anyone can contribute - ideal for birthday money and other financial gifts.
  • Child must be 18 or under
  • Because it invests in stocks and shares, the Junior ISA's value can fall as well as rise, so your child could get back less than has been paid in
Standard Life Junior ISAyesThe Standard Life Junior ISA from £10 pm. Tax efficient investing to help pay from anything from university fees to a first car.yesMore Info >
  • You choose how much you want to pay in, and when. From £10 to £340 a month or a £50 lump sum up to £4,080 in the 2015/2016 tax year.
  • Available for children under 18
  • Open your child’s Junior ISA online and set up individual pots e.g. "Granny's Uni Fund"
  • Child must be 18 or under
  • Because it invests in stocks and shares, the Junior ISA's value can fall as well as rise, so your child could get back less than has been paid in.
Junior Stocks and Shares ISAyesFREE Children's ISA Guide. Choose from over 2,500 unit trusts and OEICs from leading fund managers. Invest from £25 per month or lump sums of £100.yesMore Info >
  • Same tax benefits as an adult ISA - 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 £100 to £4,080 or start a monthly direct debit from just £25 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. 
One Family Junior ISAyesThe OneFamily Junior ISA helps you to invest for your child’s future. It could help towards going to uni, driving lessons or perhaps helping to pay for a flat of their own. yesMore Info >
  • Award winning: Winner of the Moneyfacts Award for Best Junior ISA Provider (Awarded to Family Investments in 2014. OneFamily was established following a merger between Family Investments and Engage Mutual)
  • You choose how much you want to pay in, and when. From £10 to £340 a month up to £4,080 in the 2015/2016 tax year.
  • Available for children under 18
  • Open your child’s Junior ISA online and set up a Direct Debit and as a thank you OneFamily will send you up to £30 in vouchers (terms and conditions apply – please see OneFamily website).
  • Annual management charge 1.5% deducted directly from the fund's income.
  • Because it invests in stocks and shares, the Junior ISA's value can fall as well as rise, so your child could get back less than has been paid in.
Scottish Friendly My Select Junior ISAyesA range of assets including UK and global shares, bonds and cashyesMore Info >
  • Invest up to £4080 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
Children's Investment Plans - non-ISA
ProviderServiceISA OptionMinimum InvestmentMore Info
Scottish Friendly Child Bondno
£25.00 pm
More Info >
  • Invest from £25 a month for a child under 16
  • You can invest for your own child, or for a grandchild, friend, or other relative. 
  • The child gets a guaranteed minimum cash sum at the end of your selected term.
  • The bond's payout will be related to the performance of the assets within the Scottish Friendly With-Profits fund which includes the stock market, bonds, cash and property.
  • A small amount of life cover for the child is automatically included as a condition of the tax benefits.
  • 10 year minimum term
  • Tax treatment depends on individual circumstances and tax law may change in the future. 
  • If you stop the Child Bond within the first 2 years, the child gets nothing back. After 2 years, the payout may be less than you paid in. 
Shepherds Friendly University Savings Planno
£100 pm
More Info >
  • Save from £100 to £200 a month
  • Specifically designed to save for your child’s university education. 
  • Between the ages of 18 and 21, the child can take a full lump sum in one go, or withdraw the money in stages throughout their course, to help cover living costs and fees
  • If your child decides that they don’t want to go to university, or chooses a different career path, then they will receive a tax free lump sum
  • Get a love2shop voucher worth up to £30 when you apply
  • How the investment performs may vary during the term of the Plan. Because of this the child could receive a higher or lower sum than you expect at the end of the plan and may not get back as much as you have paid in.
  • How the investment performs may vary during the term of the plan. Because of this the child could receive a higher or lower sum than you expect at the end of the plan and may not get back as much as you have paid in.
  • If the Plan is stopped and money is taken out at any time before the end of the Plan you will have to pay a surrender penalty.
  • Tax treatment depends on individual circumstances and tax law may change in the future. 
Shepherds Friendly Young Saver Planno
£7.50 pm
More Info >
  • Save from £7.50 to £100 a month
  • You can invest for your own child, or for a grandchild, friend, or other relative. 
  • Get a tax-free lump sum for the child at age 18 or after 10 years, whichever is later
  • Withdraw up to 25% of the fund when your child reaches age 11
  • Includes sickness benefit after 4 weeks of continuous sickness
  • Get a love2shop voucher worth up to £30 when you apply
  • If money is taken out at age 11, this will reduce the amount the child receives at the end of the plan.
  • How the investment performs may vary during the term of the plan. Because of this the child could receive a higher or lower sum than you expect at the end of the plan and may not get back as much as you have paid in.
  • Tax treatment depends on individual circumstances and tax law may change in the future. 

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.