Why start early for children
Time is a child's biggest advantage — money invested early has years to grow. The best approach is tax-efficient, matched to when the child will need the money, and (for long horizons) invested for growth. Here are the main options.
1. Junior Stocks & Shares ISA
A tax-free wrapper for investing on a child's behalf, accessible to them at 18. Best for long-term growth — the long horizon suits investing in funds, and all growth is tax-free. The most popular choice for most families.
2. Junior Cash ISA
Tax-free savings for a child, lower risk but lower growth. Best for shorter horizons or families who prefer no investment risk — though over many years, investing usually outpaces cash.
3. Children's pension
You can start a pension for a child, with tax relief, giving decades of compounding. Best for very long-term thinking — though the child can't access it until pension age, it's extraordinarily powerful over time.
4. Premium Bonds
NS&I Premium Bonds offer tax-free prizes instead of interest. Best as a fun, no-risk gift where capital is safe — returns are variable and prize-based rather than guaranteed growth.
5. Bare trusts and designated accounts
For larger sums or more control over timing, a bare trust holds investments for a child. Best for grandparents or those wanting flexibility beyond the Junior ISA limit — take advice on tax and access.
Choosing the right option
- Long-term growth: Junior Stocks & Shares ISA
- Lower risk / shorter term: Junior Cash ISA
- Very long-term: children's pension
- Larger sums / control: bare trust
How to invest for your child well
A qualified adviser can help you choose tax-efficient options matched to your child's timeline. Find an investment adviser through Nesto — free, no obligation.
Frequently asked questions
What's the best way to invest for a child?
For long-term growth, a Junior Stocks & Shares ISA is the popular choice — tax-free, with years for investments to grow before age 18.
Can I start a pension for my child?
Yes — with tax relief and decades of compounding, though the child can't access it until pension age. It's powerful over the long term.
When can a child access a Junior ISA?
At 18, when it converts to an adult ISA and becomes theirs to access.
Are Premium Bonds a good gift for children?
They're safe and fun, with tax-free prizes, but returns are variable. For growth, a Junior ISA usually does better over time.
What is a bare trust?
An arrangement holding investments for a child, useful for larger sums or more control. Take advice on tax and when the child can access it.