Jenny and Miles have a 10-year-old daughter, Jasmine, and are already thinking about how to give her the best opportunity in life.
They have seen housing prices continue to rise and the cost of living explode. They worry that it will be hard for Jasmine to get ahead and set herself up financially when the time comes, and want to do what they can to help.
Right now, their money is squeezed between funding Jasmine’s schooling, paying off a mortgage, and general living expenses.
They want to start a savings plan now to spread the load over many years, worried they won’t have any savings when the time comes. Their parents have told them they would also like to put some money aside for Jasmine’s future.
Jenny and Miles opted for a 10-year Investment Bond, which provided them with a structured savings plan, reducing the temptation to use the funds for other purposes. To protect the money from misuse, they kept the bond in their names but designated Jasmine as the beneficiary.
"We appreciated the separation of this investment from our other finances, which minimises the temptation to reallocate the funds."
This arrangement allowed Jenny and Miles to make annual contributions, adhering to the rule of not exceeding 125% of the previous year’s contributions. Additionally, Jasmine’s grandparents were able to contribute to the fund, enhancing its growth potential.
A significant advantage of the Investment Bond was that the returns did not need to be included in Jenny and Miles’ taxable income. This was particularly beneficial during Jasmine’s early years, as it helped them maximise their eligibility for government benefits. Confident in their long-term savings strategy, they selected a high-growth investment option, anticipating that the funds would not be needed for several years.
Despite their primary goal of saving for Jasmine’s future, Jenny and Miles found comfort in knowing they could access the funds in case of an emergency. The flexibility to transfer ownership of the bond at any time allowed them to maintain control over when Jasmine would receive the money. This feature served as a safeguard in case they had concerns about how she might handle the funds or if they decided to retain the money for a longer period.
Since the tax was paid within the fund, there would be no tax liability after the 10-year period when they, or Jasmine, began using the money. This ensured that the withdrawals would not impact their taxable income.
Jenny and Miles initially invested a lump sum from a gift given by Jenny’s parents and planned to make regular contributions each year. They appreciated the separation of this investment from their other finances, which minimised the temptation to reallocate the funds.
Both sets of grandparents were pleased with this arrangement, knowing they could continue to contribute to Jasmine’s future if they wished. This collaborative effort between Jenny, Miles, and the grandparents fostered a strong financial foundation for Jasmine, providing peace of mind and a promising future.
An Investment Bond gives you the option to invest on behalf of your child or a grandchild, niece, nephew, godchild, or any other young person who is important in your life.
You can continue to own the investment, or you can set a date when ownership automatically transfers to the child.
Forward-thinking and financially savvy parents and relatives often use investment bonds to help set their children up for financial success.
Explore more case studies
Grow your wealth,
consolidate your legacy
consolidate your legacy