Herald - Issue 450

Page 72 • The HERALD • 7th December 2023 v SAY YOU SAW IT IN THE HERALD v ASK A PROFESSIONAL SAVING AND INVESTING FOR THE NEXT GENERATION (PART TWO) by Michael Osman, Oyster Financial Planning Investing strategically By starting early and investing strategically, it will enable you to provide a solid foundation for your child’s or grandchild’s economic wellbeing. Choosing the right investment account When considering the tax implications and how to arrange your a airs best, if appropriate, tax-e cient structures like Junior ISAs (JISAs), Bare Trusts, and Pensions should be explored. Junior Stocks & Shares ISA (JISA) A Junior Stocks & Shares ISA (JISA) allow parents to invest in various investments on behalf of their children. While grandparents can contribute to a JISA, only parents or legal guardians can open one on behalf of the child. e money in a JISA is locked away until the child turns 18, at which point it becomes their ISA. e advantage of this account is that it is tax-e cient, meaning any gains made do not incur Capital Gains Tax. A JISA has a current annual allowance of £9,000 (tax year 2023/24), and anyone can contribute. Bare Trusts A Bare Trust is a simple trust in which the bene ciary (the child) has the absolute right to the capital and assets within the trust. A Bare Trust is commonly used to pass assets to young people. In a Bare Trust, the assets are held in the name of the trustee (typically a parent or grandparent) until the bene ciary reaches a speci c age, o en 18. Unlike a JISA there are no limits on what can be settled into a Bare Trust Pensions for Children Starting a pension for a child might sound odd, but it could make nancial sense. e pension will grow taxe ciently, and it can be a great way to give your child a head start on their retirement savings. For every £80 contributed, a further £20 will be added in tax relief. One downside is that with a rule change soon to come through these assets cannot be accessed at all until the investor is aged 57 which needs to be considered. ese are just some of the options available and there are rules and tax implications and time horizons for gi ed monies that need to be considered when considering any of the above. One savings rule I always talk to clients about is the 10% rule. The 10% Savings from Earnings Rule I have written about this before. Parents and grandparents encouraging their children and grandchildren to save 10% and get used to saving 10% of their earnings once they start work. is rule still stands and should be encouraged. Starting this 10% savings behaviour as soon as someone starts earning and continuing with this can be extremely bene cial in a number of ways including building up a good-sized house deposit for example. To discuss any of these investment ideas please get in touch with Michael at Oyster Financial Planning in Hythe Village, call: 023 8084 8410 or email: michael@ oyster nancialplanning.co.uk Following on from last issues article on Savings and Investing for the Next Generation here is Part Two concentrating more on the speci c kinds of investments available and that could be considered. Michael Osman, Oyster Financial Planning