Saturday, June 1, 2024

Our guide to Junior Investing

Our guide to Junior Investing

One of the most important aspects of your wealth, for many investors, is being able to secure the futures of the next generation.

In this case, there are many things you can do to ensure you build your children’s wealth effectively.

Read below to find our guide on junior investing, showing you what it is and how you can execute it effectively.

What is Junior Investing?

Junior Investing is a specific type of approach that allows you to grow your children’s wealth with various types of investment accounts.

These accounts are offered by modern wealth management services and various other providers, and can include things such as Junior Individual Savings Account (Junior ISA/JISA account) and Junior General Investment Accounts (Junior GIAs).

Each of these accounts work in a similar way to the standard, adult versions, except there are certain rules and processes which differ slightly for the junior accounts.

A Junior ISA allows you to save money for your child each year, which is sheltered from tax. These savings are then accessed by the child when they turn 18. The Junior ISA allowance for the current tax year 2023/2024 is £9,000.

Junior GIAs are opened by a ‘bare trust’ to grow wealth for your child. These accounts do not have an annual allowance on how much can be invested each year. However, unlike Junior ISAs, the returns may be taxable.

How can you execute Junior Investing effectively?

There are many ways you can conduct Junior Investing effectively for your children’s wealth. For example, this includes:

  • Seeking a modern wealth management service

If you want to take the right approach to Junior Investing, it’s important to consider a modern wealth management service.

These financial experts will analyse your financial situation, and help you execute investments for your children in the right way.

For example, they can establish what goals you have for the future, and structure your investments in your junior accounts according to this.

Also, they have extensive knowledge surrounding tax rules for these accounts, so they can help you grow your children’s savings as tax-efficiently as possible.

  • Investing in different types of accounts

Another way to execute your Junior Investing process effectively is to make sure you vary your investments in different accounts, which each have their own benefits.

For example, Junior cash ISAs allow you to save money each tax year for your child. With a Junior stocks and shares ISA, you not only save money, but also grow these savings with potentially successful investments.

In addition to this, any returns from these successful investments will not be subject to income or Capital Gains Tax, so this adds further tax benefits to your child’s wealth.

  • Making the most of the tax allowances

A good tip for Junior Investing is to also make the most of all the allowances that could benefit your child’s wealth – as well as yours.

For one, you can make sure you invest the full amount in your Junior ISAs, so you grow your child’s wealth as effectively as possible. Junior GIAs don’t have an allowance, so you can contribute as much as you want.

However, you can also use your child’s personal income tax allowances and Capital Gains Tax allowances when it comes to the returns from their Junior GIA.

This can help them shelter their returns from tax as much as possible, and get the most out of their accounts when they choose to withdraw their money.

For more information on how you can execute Junior Investing effectively, contact your modern wealth manager to begin discussing your requirements.

Please note, the value of your investments can go down as well as up.

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