As grandparents, one of the most rewarding things you can do is secure a promising future for your grandchildren. Investing in your family’s financial well-being can give you peace of mind – you won’t have to worry about their debts or financial future.
In the UK, there are many avenues you can explore when investing money for your grandchildren’s future. But which are the best investments for grandchildren? That’s what we’ll be exploring in this guide.
Read on for information on some of the best investments for grandchildren, from standard junior ISAs to pieces of blue-chip art.
Investing in your grandchildren’s future can begin with Junior ISAs (Individual Savings Accounts). Junior ISAs offer a tax-efficient way to save for your grandchildren’s future, allowing them to access the funds once they turn 18.
These accounts come in two types: cash Junior ISAs and stocks and shares Junior ISAs. While cash ISAs are low-risk, stocks and shares ISAs have the potential for higher returns over the long term.
Cash ISAs are tax–free savings accounts that pay interest, whereas stocks and shares ISAs allow you to invest in the stock market.
Be sure to compare the different products out there – some will have significantly different interest rates. Take some time to weigh out the pros and cons of each account for a grandchild.
The interest generally won’t be taxed if the money comes from a grandparent. However, if it comes from a parent or legal guardian, they will need to pay tax on any interest over £100 a year.
Consider opening an investment account specifically designed for your grandchildren. This type of account allows you to invest money on their behalf and manage the funds until they are of age.
Investment accounts can be a valuable tool for teaching your grandchildren about financial responsibility and the principles of investing.
Instead of just giving your grandchild a lump sum of money, why not take the time to educate your grandchildren about how to manage their finances effectively? This information could be invaluable and equip them for their financial future.
As a grandparent, you want to be a positive role model for your grandchildren. This could involve learning about ethical investments.
Opt for investments that align with your values and individual circumstances. For example, invest in companies or industries that prioritise social responsibility and environmental sustainability.
Teaching your grandchildren about ethical investing can teach them important values while securing their financial future.
Tax-Exempt Savings Plans
Take advantage of tax-exempt savings plans (aka ISAs) to maximise the returns on your investments. Lifetime ISAs, for example, allow your grandchildren to save for their first home, to overcome debt or to plan for retirement, with the added benefit of a government bonus.
These tax-exempt savings plans come in various types, including Cash ISAs and Stocks and Shares ISAs. You can invest up to a certain limit each tax year for your grandchildren – and any earnings or interest you make within this allowance remain tax-free.
This can encourage your grandchildren to save and invest while enjoying the benefit of not having to worry about tax implications on their savings. Teaching them about tax-efficient saving from an early age can set them on a path to financial success.
Investing in a junior pension can be a forward-thinking strategy. Junior pensions allow contributions to grow tax-free, providing a solid foundation for your grandchildren’s retirement.
While retirement may seem distant for them now, starting early ensures the power of compounding is on their side. As the pension age is steadily increasing, it can’t hurt to start preparing early.
Art can be a great investment to leave behind for your grandchildren. Art is not just a great investment opportunity – art can be an heirloom that you pass down to your children and grandchildren.
A piece of blue-chip art is something that can be kept in the family for generations while it increases in value. However, be sure to consider Capital Gains Tax when gifting assets such as art to your grandchildren. Speak to a financial expert to discuss any Inheritance Tax or CGT expectations.
Investing in art not only adds cultural value to their lives but can also appreciate significantly over time. Keep in mind that art investment requires careful consideration and expert advice. Choose pieces that may gain value over the years, turning into a meaningful and valuable asset.
Unlike traditional assets like stocks and bonds, art often appreciates over time, providing a hedge against inflation.
Don’t forget that art can also be a source of joy and inspiration. It can start conversations, evoke thought, and enhance your overall quality of life. It’s something you can enjoy, your children can enjoy, your grandchildren can enjoy, and even your future great-grandchildren can enjoy.
Art investment offers not only financial gains but also the benefits of aesthetic enjoyment and social connection. It’s a unique way to combine passion with financial security.
If you’re looking to start investing in art to secure the financial future for your grandchildren, our art experts at Grove Gallery are on hand to help. Trust our art advisors to guide you through the process, and help you select the right pieces for you and your family.
You can purchase art for just £3,000 – and expect returns of up to 12% per year. Invest in a wide range of blue-chip artists with Grove Gallery – blue-chip art is considered a more stable investment, and more likely to appreciate over time. This is ideal for long-term investments.