What is the best way to invest on behalf of a child?
Q.
My son is about to have his first child and I want to invest for
the child's future. What is my best option - buy shares or
insurance bonds? Should they be in the child's name or my wife's
name? My wife doesn't work. What will be the best tax option?
A.
It is certainly possible to invest in your wife's name, but as
the investment grows in value the earnings could affect government
benefits - especially if she returns to work. This is why I prefer
share-based insurance bonds, because their earnings accrue in the
form of bonuses and there is nothing to declare on anyone's tax
return each year. Furthermore, when appropriate, the investment can
be transferred to the child free of capital gains tax. An
investment adviser will be able to help you choose one that is
appropriate for your cirumstances.
Each week financial advisor Noel Whittaker answers your
questions.
