Investing in the stock market can be an effective way for you to help your child grow their savings. It makes sure that their money is always working hard for them. There is a risk that you may not get your initial investment back with stock market investments. However, as with most types of investing, stock market investments can offer significantly higher returns, especially over the long term. While stock markets can go down as well as up, the longer your money stays invested, the more time you'll have to recoup any losses and a better chance of making money. The earlier you begin investing on behalf of your child, the bigger the rewards they may enjoy later. Investing in the stock market could be a great way of setting your children up for future success by helping them learn about saving and the exciting benefits of investing their money. But how old do you have to be to invest? Read on to find out.
What age can you start investing in the UK?
If you wonder how old you have to be to buy stocks directly, the answer is 18. While it's possible to invest in the stock market on your child's behalf before they turn 18 via a Stocks and Shares Junior ISA with GoHenry, they cannot invest independently until their 18th birthday. While this may be disappointing for young people keen to start investing, the rules are there to protect youngsters who may be too young to understand the stock market and the risks involved.
Is it possible to invest in stocks before you are 18?
While they may not be able to invest on their own before they turn 18, the good news is that your children don't have to wait until then to start benefiting from investing. You can open a Junior ISA with GoHenry for your child when they are six years old through the GoHenry app. You can also transfer money from a Child Trust Fund or existing Junior ISA into it. GoHenry's Junior ISA makes it easy to invest in your children's future. If you're not sure whether your child has a Child Trust Fund, visit the HMRC website to find out.
You can get started with just £1 and contribute up to £9,000 each tax year while checking how your children's investments are doing via the GoHenry app. Investing in the stock market, supported by Money Missions, is a great way of helping to teach children about responsible investing. With bitesize money lessons, youngsters can build their financial literacy and confidence and learn about investing in stocks and shares and how it can boost their savings.
What is a Stocks and Shares Junior ISA?
Junior ISAs are available as either a 'stocks and shares' or a 'cash' option. Kids can have both types of Junior ISA, but only one of each type. GoHenry's Junior ISA is a tax-efficient way to invest your children's money. The money in a Stocks and Shares Junior ISA is invested in shares and in bonds or similar fixed-income investments, and any money earned from these investments is tax-free. While there is potential for great returns with a Stocks and Shares Junior ISA, there is a risk that investments may go either down or up in value.
Once your child turns 16, they can start managing the account themselves. The Junior ISA will continue to grow until your child turns 18, when it automatically switches to an adult ISA. They can then withdraw the money to support themselves through university, buy a car, move out of home or even put down a mortgage deposit. Alternatively, they can leave the money where it is so it has the potential to build up without paying capital gains or income tax on it.
Apply for a Junior ISA today with GoHenry
It's quick and easy to apply for a Junior ISA with GoHenry. If you haven't already set up a GoHenry account, it's simple to do so. Once your GoHenry account is up and running, you can apply for a Junior ISA through the app. Get started with as little as £1 and put in up to £9,000 each tax year. Using the GoHenry app, you can manage your payments into the Junior ISA, keep an eye on how your child's investments are doing and check the balance. There's also a helpful calculator available that you can use to work out what your child's Junior ISA might be worth when they turn 18. Although they cannot withdraw the money until they are 18, your child can begin managing their GoHenry Junior ISA themselves once they turn 16.
For informational purposes only.
The information provided is not intended to be investment, tax or legal advice - nor does it claim to be comprehensive. Speak to a professional, if you're unsure about whether investing is right for you. We do not endorse any third parties referenced.
Tax treatment depends on your individual circumstances and may be subject to change.
Junior ISA rules and T&Cs apply. Investment services provided by gohenry Family Finance Limited, an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority: (FRN: 574048).