During volatile financial times, future proofing against economic turmoil by investing for our loved ones can seem more pertinent than ever.

It’s not just sweet treats and biscuits that grandparents choose to give to their grandchildren. Grandparents are often keen to contribute to grandchildren’s savings as a way of rolling wealth down the generations and saving tax.

Whether it’s saving for school or university education, or to provide a deposit on a first home, giving your children or grandchildren a good start in life is among most people’s top priorities.

Maybe you want to teach your children or grandchildren smart money-management strategies, help them pay for university or set them up for financial success as adults? Whichever it is, it’s important to jump-start saving and investing for them early on.

Cash may seem like the safest option with guaranteed returns but there is a risk that interest will not keep up with inflation. A child will not lose money, but they may be able to buy less with the fund in future than they could today.

Stock market investments have historically outperformed cash over the long term but are riskier – they will fall as well as rise in value and a child could get back less than invested. Past performance should not be seen as a guide to how investments might perform in future.

Here are a few ways to invest for grandchildren

Most accounts for children must be opened by a parent or legal guardian, but there are exceptions. Traditionally. There are three junior accounts that grandparents can pay into, one of which they can also manage on a child’s behalf.

Junior ISA

Free from UK income and capital gains taxes. Once opened by a parent or legal guardian, anybody can top up, until the annual savings limit of £4,368 (in total) is reached. Converts to an adult ISA at age 18.

Junior Pension (child’s pension)

Free from UK income and capital gains taxes. Once opened by a parent of legal guardian, anybody can top up. Benefits from 20% tax relief on contributions up to the annual limit, so a gross contribution of £3,600 (the maximum for most children) only costs £2,880.

Junior Investment Account

Can be opened by a grandparent. Assets are held ‘in trust’ for a child until they turn 18, although earlier withdrawals are possible if they are used for the benefit of the child and are normally taxed as if they belong to the child. Can be useful for Inheritance Tax (IHT) planning.

When money or assets are paid into an account for someone else’s benefit (such as a child’s), this is treated as a gift. Some gifts are (or may become) free or exempt from inheritance tax, others may be subject to it. Remember tax rules can change over time, and the value of benefits will depend on the child’s circumstances.

If you’d like to discuss investing for your children, grandchildren or godchildren then please visit our website to learn more or call to make an appointment with one of our independent advisers.

Find out more about minimising tax