Investment options

• Tax efficient investments
• Investments for everyone
• Investments for children
• Retirement planning

Expert advice

• Financial Planning

Existing Customers

• Online Fund Prices

Help and guides

• Guides to investing
  • ISAs made easy
  • Guide to investments
  • Guide to investments for children

Parent, grandparent, aunt or uncle, it’s easy for you to make an investment in a child’s future.

You can save a regular amount every month or invest a lump sum. You can do both if you want. Usually, you’ll want the child to be able to benefit from the money when they reach age 18 or 21, but the money can usually remain invested for longer.

A maturing investment could have a large positive impact on a child, particularly if they have access to the funds at a time when they’re starting to make their own way in the world. They could use the money for:

• Their education – they might have university fees and the costs of university accommodation to meet
• Enjoying a gap year – when school, college or university is over, a maturing investment could give them the funds to help them see the world
• A deposit on their first home – it’s getting harder to get on to the property ladder without a deposit. A child’s investment could help make this possible

• Investment options

Children born in the UK on or after 1 September 2002 are eligible for a Child Trust Fund. This is a tax-efficient investment plan boosted by contributions from the government.

• Learn about Child Trust Funds

As well as Child Trust Funds, there are other investment products suitable for child investments and savings.

These are offered by building societies and banks. They are an easy way to save and pay a fixed or variable rate of interest. They could pay interest without deducting tax, if the parent or child fills out form R85.

Once a child reaches age 16, they can have a cash ISA. Up to £3,600 can be invested every tax year in a cash ISA. The interest is automatically paid tax free.

These can be bought for children under the age of 16. They come from National Savings and Investments. The money has to be invested for at least five years, but the returns are tax free.

Unit trusts, investment trusts and OEICs are all examples of collective investments. They can be held on behalf of a child. Collective investments can invest in a broad range of assets, such as equities, property and bonds. They can offer the potential for high returns but are riskier than cash based investments.

• Using trusts

Trusts are becoming an increasingly popular way to invest on behalf of your children or grandchildren. They can help preserve your own wealth, create financial independence for the child, and reduce inheritance taxes.

• You can place different types of investments into a trust. A trustee is normally appointed to look after the running of the trust. This could be someone with experience of managing money
• You can impose some conditions to stop the child spending the trust monies recklessly
• The trust fund assets are removed from the settlor’s (the person who sets up the trust) estate for inheritance tax purposes

Putting money or assets into a trust isn’t a decision you should take lightly. You might not be able to get your money back – even if you need it. Always seek expert professional advice if you’re considering setting up a trust.

• Child Trust Fund

A Child Trust Fund is way of saving for your children in a tax-efficient fund.

Before your child’s first birthday, the Government will send you a voucher worth £250. If you’re on a low income, the voucher could be as much as £500. The voucher can only be used to open a Child Trust Fund account.

Near your child’s seventh birthday, the Government will pay another £250 into the Child Trust Fund account (or £500 if you’re on a low income). In addition, you, or anyone else, can invest up to £1,200 a year into the account.

The money and the account is in the name of your child – but they can’t withdraw any of the money until they reach age 18.

RBS offers a Stakeholder Child Trust Fund. With this type of fund the money is invested in stocks and shares, cash and bonds. This provides the opportunity for good growth over the 18 year term. After 13 years, we start to move the entire fund into lower risk investments like cash. This reduces the risk of any fall in the value of the fund in the years approaching its maturity.

• Common questions

• Can I put money in an OEIC or unit trust on behalf a child?
• When can I open a Child Trust Fund?
• Do children pay income tax on any interest earned?
• Is there a maximum limit on child investments?
• Will I be charged income tax or inheritance tax on money invested for my child?
• I want to invest directly in the stock market for my child. Where can I get help?
• Where can I get more information about investing for children?

A. Yes. You can usually set up a fund in a child’s name using a ‘bare trust’. The company that offers the fund will be able to give you the necessary forms. Under this type of arrangement you are the investor and the child is the beneficiary.

A. If you receive child benefit, you’ll receive a Child Trust Fund voucher shortly after your child is born. Take the voucher to the company you want to open the account with. If you don’t use the voucher within a year, the Government will open an account for you.

A. All of the growth in a Child Trust Fund is tax free. There may be tax to pay on other types of investment products depending on the amount of interest earned. Children are entitled to the same personal tax allowances as adults. Consult a tax expert if you’re in any doubt about paying tax.

A. The annual limit for a Child Trust Fund is £1,200. There are rarely limits on other types of investment product. If you’re making a large investment, you might want to seek professional tax advice in case it has an impact on your, or the child’s, tax liability.

A. Tax is often a complicated area. If you’re in any doubt about your tax liability, you should seek professional tax advice.

A. The RBS Share Dealing service offers accounts which let you buy company shares for children.

• RBS Share Dealing

A. If you want to know more about investing and the type of investments that would be right for you, speak to one of our Financial Planning Managers. You can have a financial planning review with absolutely no obligation. Just contact us to arrange an appointment.