Choosing the right savings or investment account for your child is a step worth celebrating – but with so many options, it can feel overwhelming. The good news? A few key questions can help you find the account that best matches your child’s needs, your family’s goals, and your comfort with risk.
Let’s break it down together.
1 Start with Your Time Horizon
Time horizon simply means: how long until your child will need the money?
If your child is more than 5 years away from turning 18:
You have a longer time horizon. This means you can consider options with higher growth potential – even if they come with a bit more risk – because there’s time for any ups and downs in the market to even out.
If your child is less than 5 years from turning 18:
Your time horizon is shorter. Here, it’s probably wise to reduce risk, because there’s less time to recover from any dips in the market before your child needs the money.
Why does this matter?
The longer your money is invested, the more time it has to grow and recover from market fluctuations. For short-term goals, protecting what you’ve already built becomes more important. The money does not need to be withdrawn when a child turns 18, they can leave it invested for as long as they choose.
2. Understand Risk Appetite
Risk appetite is how comfortable you are with the idea that the value of your investments might go up and down.
- Low risk appetite: Prefer accounts where your money is safe, even if growth is likely to be lower over the longer term (e.g., Cash JISA, Child Savings Account, Junior Premium Bonds).
- Medium or higher risk appetite: Willing to accept some ups and downs of the value for the chance of higher returns over time (e.g., Stocks & Shares JISA).
3. Why Fund Risk Changes as Your Child Gets Older
At Mia Wealth, we’ve built our approach around this principle.
- For children aged 13 or under (more than 5 years from 18):
The default investment is an upper-medium risk fund – BlackRock MyMap 7 ESG. This fund aims for higher growth, accepting more short-term ups and downs, because there’s time for the investment to recover before your child turns 18. - For children aged 13+ (less than 5 years from 18):
The default switches to a medium risk fund – BlackRock MyMap 4 ESG. This is because, as your child gets closer to turning 18, there should be less short-term ups and downs.
This approach is based on a simple rule of thumb:
- 5 years or more until the money is needed: You can afford to take more risk for more growth.
- Less than 5 years: It’s likely safer to reduce risk and protect what you’ve saved.
4. Putting it All Together: How to Decide
Here’s a simple way to guide your choice:
| Time Until Child Turns 18 | Your Risk Appetite | Suitable Account Types | Example Fund (Mia Wealth) |
|---|---|---|---|
| 5+ years | Medium/High | Stocks & Shares JISA, Upper-Medium / High Risk | BlackRock MyMap 7 ESG |
| 5+ years | Low | Cash JISA, Child Savings Account, Bonds | N/A |
| <5 years | Medium | Stocks & Shares JISA, Medium Risk | BlackRock MyMap 4 ESG |
| <5 years | Low | Cash JISA, Child Savings Account, Bonds | N/A |
Questions to ask yourself:
- How many years until my child turns 18?
- Am I comfortable with the value of my child’s pot going up and down if it means more growth over time?
- Will my child need the money for something specific at 18, or can it stay invested longer? Ie your child may be less than 5 years away from turning 18 but is planning to keep the money invested until they are 25 so they have a longer time horizon
Next Steps
If you’re not sure which account or fund is right for you, start by thinking about your time horizon and risk comfort.
Read our article “What Are the Different Savings and Investment Accounts for Children?” for a detailed look at your options.
Consider speaking with a financial adviser if you want tailored guidance.
Investing puts your capital at risk. The value of investments can go down as well as up, and you may get back less than you put in. If you’re not sure whether an investment is right for you, it’s best to speak to a qualified financial adviser.
Mia Wealth Limited (Mia Wealth) is an appointed representative of RiskSave Technologies Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN 775330). Mia Wealth is a company registered in England and Wales (No. 15818371). Mia Wealth can be found on the Financial Conduct Authority Financial Services register under FRN 1033918. Our address is Fairbourne Drive, Atterbury Lakes, Milton Keynes, England, MK10 9RG.
