Plan your Child’s Future by Investing as Soon as they are born

Sep 3, 2015 | Financial Planning, Trusts & Tax Planning

Investments in a Newborn’s Future now Pay Dividends Later

There can be no doubt that a financial investment for your child from day one will help them considerably as an adult. Having the money to pay for university fees and or mortgage deposits will save a lifetime of debt. The question is what is the best way to save for your child’s future?

Junior ISA

One way is to start is by using a junior ISA savings account. You can save up to £4080 tax free, and the money grows overtime. When your child reaches 16, they decide how they want to invest the money and at 18 they get their hands on the investment.

It is the latter which is scary for parents. Most want their children to use the money sensibly, but as it is their money they can just as easily by a motorbike instead of paying for their university education.

Alternatives to Junior ISAs

There are alternatives however, which give the parents more control over the investment, and in some cases a better return on investment. Here are some suggestions:

Create an Account in the Parents Name on Behalf of the Child

This system allows you to keep control of the account indefinitely. When you open the account you have to state clearly that it is opened on behalf of the child. The tax implications are more severe than the ISA, as gains will impact on your income and capital tax gains liabilities.

A bare trust will offset this however, as the tax liabilities are offset by your child.

However, should the account start to generate an income of over a £100 per year, then you as the parent will start paying tax. If two parents are involved the ceiling rises to £200 per year. (£100 each).

Taking the Investment Route for your Child

As well as traditional savings accounts investing could hold the key to a successful financial future for your child. As with other investment vehicles there are cautious and more risky options in terms of returns.

With some investments providing returns of up to 399% on the original investment, this option is probably the best for your child in terms of control and return. The secret is balancing risk vs. return. This has been the downfall of many in the past.

To ensure your child has the cash and you have the control, and your money works away in the background, my award winning financial planning services can help your child get the boost they need.

This can make education and house buying a lot easier, and avoid the debts many are facing at the moment. Click here to contact me or complete the CALL BACK SERVICE form on this page. Together we can give you child the best possible start to their adult life.

For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at [email protected]


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