Christmas is right around the corner! With a positive tick against everyone on your gift list, if you’re planning to give an envelope stuffed with cash to the children in your life, read on.

While gifting money can be a great alternative to buying more "stuff" that isn't truly needed, investing that cash could have a lasting impact and improve their future financial wellbeing.

In fact, if you invest consistently for a child throughout childhood, teen years, and beyond, leaving it untouched could help them become a millionaire by age 57. [1]
 
Here are three wise ways to invest for children and grandchildren.

1. Gift tax-efficient growth with a Stocks and Shares Junior ISA

While you could opt for a Cash JISA, a Stocks and Shares JISA may have a better chance of outpacing inflation over the long term, as you can invest in equities.
 
While the value of the investment can fluctuate, a diversified investment and long-term time frame could deliver better returns than cash savings. Plus, gains are free of both Income Tax and Capital Gains Tax (CGT).

When your child turns 18, they can withdraw the funds or allow the JISA to become a regular ISA which they can continue contributing to or simply leave invested.

There’s an annual limit of £9,000 (2025/26) and up to this limit, anyone can contribute to a JISA on a child’s behalf. However, it must be opened by the child’s parents or legal guardians.

If you invest £9,000 a year – a total of £162,000 over 18 years – by the time a baby celebrates their 18th birthday, the investment could have grown to £266,000. Left untouched, by the time they turn 57, it could be worth a total of £1.8 million. These figures are based on 5% annual returns. [2]
 
2. Lock in future retirement income with a child’s pension

One way to ensure youngsters can’t touch the investment until later in life is to pay the money into a pension, as funds can only be accessed from the minimum pension age – currently 55 but rising to 57 in 2028.

You can contribute up to £2,880 a year (2025/26), and basic-rate tax relief is automatically added at source – making the total contribution £3,600.

The long-term nature of this investment means your financial gift has significant potential for investment returns and compound growth.

Making regular pension payments of £2,880 a year from birth until 18 could provide your child a healthy pension pot of more than £737,000 at age 57 – and even more if they and their future employer contributed when your child started work. [3]
 
3. Give a prize present with Premium Bonds

If pensions and JISAs seem too dull, Premium Bonds could provide the perfect present.

Premium Bonds combine secure savings with the opportunity to win prizes every month. Winnings start at £25, but if your child hits the jackpot, they could win up to £1 million.

The average annual prize fund rate in November 2025 is 3.60%, and each £1 bond has a 1 in 22,000 chance of winning. [4]
 
Prizes are free from UK Income Tax and Capital Gains Tax, and you can receive payment straight into your bank account, by cheque in the post, or reinvest winnings to boost your chances of hitting the jackpot in the future.

Get in touch

If you’d like to start building a nest egg for the children in your life and want to discuss which option may be most suitable for your family, please get in touch.

Email [email protected] or call us on 0800 048 0150.

Please note
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.
All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
 
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
 
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate NS&I products.