Setting your children up for a strong financial future doesn’t need to wait until adulthood.
With a few smart choices, you can begin building a meaningful financial foundation for them today.
1. Junior ISAs: Tax-Free Saving and Investing
A Junior ISA (Individual Savings Account) allows you to save or invest up to £9,000 per year, tax-free. There are two types:
- Junior Cash ISA – Ideal for cautious savers who prefer low-risk growth through interest.
- Junior Stocks & Shares ISA – Offers exposure to the stock market and the potential for higher returns over time. Perfect for longer-term goals like university or a first home.
2. Junior Pension (SIPP): Long-Term Growth with Tax Benefits
You can open a Junior SIPP from birth and contribute up to £2,880 per year. With government tax relief, this becomes £3,600. While the funds are locked until age 57, the growth potential is significant.
In fact, if you stopped contributing at age 18, the pension could still grow to over £141,000 by age 57. That’s the power of early investing and compound interest.
3. Trusts: Flexible Gifting for the Future
Trusts offer a way to gift money or assets to children while retaining control over when and how they access the funds.
They’re particularly useful for larger gifts, family legacy planning, or maintaining financial oversight.
One thing with trusts is that the Trustee’s are the owners of the assets, whilst the children are the beneficiaries.
Trusts are the more complex option.
Comparison of Cash versus investing versus pension
This chart shows what happens if you invest £50 per month for a child into a cash ISA, Stocks and Shares ISA and a Junior Pension with £50pm net, £62.50 per month gross.
I have used 2.57% which is the average cash rate over the last 25 years and a 5% investment growth.
You can see that a cash JISA would give £13,595.12 at age 18, a stocks and shares Junior ISA would give £16,999.76 at age 18 and a Junior pension would be £21,050.83. As the Junior Pension is not able to be withdrawn until age 57, with a 5% growth it is predicted that this would be worth £141,140.58 at age 57 with no further contributions.
Please note, the above is for illustrative purposes only and returns cannot be guaranteed. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.
Start Building Their Financial Future Today
If you’re interested in opening a Junior ISA, SIPP, or setting up a trust, we can help you understand what’s best for your situation.
📞 Contact us today to discuss a tailored financial plan for your child’s future.
You can book your online free initial consultation HERE
*The Financial Conduct Authority does not regulate trusts.