When it comes to investing, children have time on their side and even modest, regular investments have the potential to build into a useful sum.
Assisting your children financially is a generous act at any time, but one of the most effective ways to help them is by starting an investment plan when they are very young. Even modest amounts invested on a regular basis can benefit from compounding over time – potentially a less risky strategy than investing larger amounts later when the markets may be less than favourable. While investing regularly can help smooth out the impact of market fluctuations, the value of investments can still rise and fall over time and you may get back than you initially invested. By the age of 18, your child may then have a significant fund that could help them pay for university life or contribute to a deposit on a house or flat.
As always, it’s important to take your tax situation into consideration, and our expert team will help you navigate the potential pitfalls while also discussing the advantages of each course of action. By taking advantage of gifting allowances, you and your children could benefit from the transfer of wealth without feeling the effects of capital gains or income tax penalties. The tax treatment of gifts and investments will depend on your individual circumstances and the rules in place at the time.
Your own personal circumstances will help determine what’s best for your family in terms of investing in this way, which is why we always look at the bigger financial picture before we suggest which investment path you might take.