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How To Invest For Your Beneficiaries

How To Invest For Your Kids/Grandkids And Give Them A Heads Start

By David Pritchard


Inflation levels have risen significantly in the past year. This is potentially scary news, especially for parents and grandparents looking to invest into their children’s future. With inflation running just under 10 per cent, anyone with money sitting in a bank runs a high risk of loss. On a recent episode of our podcast, A Dab of Investment, I explored some practical ways to invest for your children and yield positive returns.

How do you beat the rising levels of inflation and secure your children’s future?

What the inflation rate means for your children and grandchildren

The current inflation rate poses a dire implication for any monies you’ve set aside in the bank for your children. Since the interest rates on banks and building society deposit accounts are lower than the inflation rate, monies stored on these deposits are depreciating at around 10 per cent each year. That’s a huge – if not nearly devastating – loss!

Rather than growing against the inflation to match the state of the economy, the value of the monies will continue to regress. This translates into deposits that won’t match up to your children/grandchildren’s expectations when they need to purchase their first home – or even go off to university.

However, there is light at the end of the tunnel in the form of personal pensions and investments – or more particularly, junior ISAs.

Junior ISAs and how they work

Individual Savings Accounts (ISAs) have remained one of the most popular routes to owning investments – and for good reasons. They’re highly tax-efficient as they protect you from different forms of taxation. On top of this, you can withdraw your capital at any time without any imposed charge or penalty.

Although these accounts were designed for people aged 18 and above, there’s a variant available for younger users – junior ISAs. With this type of account, you’re able to invest up to £9,000 per annum. However, since children aren’t allowed to own investments in their name, their parents would have to make the application on their behalf. As a grandparent, you can equally pitch in by putting funds into the account.

At Applewood Independent, most of the junior ISAs which we look after are invested into real assets to yield a positive return against inflation. However, it’s important to note that these investments don’t have to be high-risk or volatile. We match our clients’ attitude to risk to the investment that’s most appropriate for the child, bearing in mind the length of time before they’re likely to access the funds. 

We do expect inflation to drop sharply at some point – to around 5 per cent by the end of the year – according to projections from the Bank of England. However, until then, it’s difficult – if not nearly impossible – to yield up to 10 per cent returns from monies simply stuck in a bank account.

Thus, at Applewood Independent, we offer our clients – and their beneficiaries – an opportunity to yield positive returns on their investments through junior ISAs.

Cash ISAs: are they worth it?

As an investor looking to secure your children’s or grandchildren’s future, you might choose to opt for a cash junior ISA. However, under the current circumstances, this isn’t the most profitable option. At the moment, they’re around 8 or 9 per cent  lower than the inflation rate, roughly translating into a tax-free loss each year.

Personal pensions: a worthwhile alternative

Whilst junior ISAs remain a profitable and frequently trodden path, there is another option – personal pensions. According to current regulations, each person in the UK is able to put money into a personal pension. This is a long-term investment that could go a long way towards securing your children’s future.

At Applewood Independent, we work with several clients who have created personal pensions for their children. The compounding effect of this long-term investment strategy is that it offers significant returns while providing the children with a headstart on their financial planning goals.

How independent financial advice can help

There are several financial products and investment opportunities currently dominating the scene. If you’re seeking to secure and invest in your children or grandchildren’s future, being faced with this many choices can be overwhelming. In situations like this, hiring a local independent adviser remains an exemplary decision. The right adviser can scout the market and help you make the right call.

At Applewood Independent, we assess our clients’ needs for their children or grandchildren and provide the most appropriate advice for their situation.

If you’d welcome our input, expertise and experience, please get in touch by emailing me at

The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article or, alternatively, contact the Applewood Independent Ltd office on 01270 626555.

The value of your investment can go down as well as up, and you may not get back the full amount invested.

Past performance is not a guide to future performance.