Know your options when investing for your child’s future
WANT to give your children’s finances, as well as your own, a bit of a fresh start this year?
Adrian Lowcock, head of personal investing at Willis Owen outlines some popular financial gifts for youngsters...
GOLD AND SILVER COINS
AS an investment, gold is difficult to value as it does not produce anything, nor does it generate an income, but it continues to be in demand by investors in times of crisis.
Gold and silver coins provide a combination of a valuable investment, while also giving you something to appreciate and admire. Coins range in age and value, with some more collectable than others.
As with any investment, it pays to do your homework about what might be valuable in the long term.
JUNIOR ISAS
A PARENT or guardian can set up a Junior Isa, but anyone can contribute up to the annual allowance of £9,000 in the current 2020/21 tax year. Money can be saved in cash or invested in stocks and shares.
The child can take control of the account when they’re 16, but cannot withdraw the money until they turn 18.
PREMIUM BONDS
PARENTS can buy Bonds for their own children, or Bonds can also be bought for someone else’s child. Until the child’s 16th birthday, the parent or guardian named on the application looks after the Bonds.
With Premium Bonds, there is no interest earned. Instead, there is a monthly prize draw. Bear in mind that any prizes are down to luck. Premium Bond provider NS&I is backed by the UK Government.
CASH SAVINGS ACCOUNTS
DEDICATED children’s savings accounts often boast relatively generous interest rates on the high street and online. These accounts hold money in a child’s name and can be a good way to encourage children to save.
A JUNIOR SIPP (SELF-INVESTED PERSONAL PENSION)
PARENTS thinking very longterm may want to consider a Junior Sipp – a type of pension for a child. Bear in mind that the value of investments can go down as well as up, so there are risks involved. From 2028, investments can be accessed when the child turns 57.