Family Investments: ISAs, Bonds and Saving Methods | Moneyfarm (2024)

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Family investments help families achieve their family’s financial goals and dreams. Family investments can do so much for your loved ones, including helping to ensure that you are always prepared for any emergencies that might arise.

⏱️ When should I start my family investments?As early as possible
🚀 How can I maximise family investments?Use tax reliefs, exemptions, and annual gift allowances
🤑 What are good family investments?Stocks and shares, bonds, ISAs, SIPPs, real estate, savings account, a family business
💡 Reasons to create family investments?To generate funds for emergencies, retirement plans, children’s education, house deposit, vacations, etc

Wisely made family investments can also ensure a good standard of living for the more elderly members of the family in their retirement years. Sound family investments can also help to fund children’s education and give your young ones a good start in life when they reach adulthood.

The aim is to start investing as a young family to help grow wealth over an extended period of time. There are many options when it comes to making beneficial family investments. They include things like bonds and ISAs of one description or another. So please read on to discover the best family investments for you and yours.

What are family investment companies, and how do they work?

A family investment company is an organisation that has been set up precisely to help families to invest for their future financial welfare. Typically, they work in the following way.

  • Parents can deposit funds in a family investment company as interest-free loans or in exchange for preference shares. This type of transaction will not be liable for inheritance tax, and the funds can be withdrawn tax-free at a later date.
  • Parents who opt for preference shares in this type of family investment trust are given voting rights at shareholder meetings.
  • Alternatively, parents can opt for non-voting shares, which can then be passed on to their children (who can receive dividends) without being subject to inheritance tax, providing that the parents live for a further seven years after the date of the gift.

However, please note that shareholders who extract profits from the companies that operate these family investments will have to pay income tax on their withdrawals.

Various vehicles for family investments

Other options aside from buying into companies that operate family investments include purchasing premium bonds from NS&I.

Buying premium bonds for a grandchild.

The options on grandparents’ investments for grandchildren include buying premium bonds from NS&I. Anyone can buy premium bonds for children under the age of 16. However, the bonds can only be registered in the parents’ or guardians’ names, who can then manage the accounts until the child reaches age 16.

While investing for a grandchild is highly desirable, and premium bonds are considered a safe investment, their value remains the same as when bought. However, there is always a 240,000 to 1 chance of winning a cash prize. The problem is that inflation devalues them in real terms because they don’t earn interest.

Investing in multifamily real estate

Another option for family investments is investing in multifamily real estate, although it is not explicitly aimed at children – just families in general. It involves investing in projects designed to house many families – like apartment complexes. The attraction of multifamily investing is the potential for long-term asset growth and income from rent.

What are mutual fund families?

You may have heard the term “mutual fund families” and wondered what these are and how they work as family investments, but they are not what you may think.

Mutual fund families are not funds designed specifically for families. The term relates to a group of mutual funds managed by one organisation. The funds are usually spread over various sectors to give the investor more diversification, even though all the funds are managed by one company.

The website has a list of what they say are the 10 best mutual fund families by assets.

While researching family investments, you may come across the Family Investments Child Trust. However, don’t get too excited. Although it is an investment vehicle, it’s nothing to do with children.

Other non-specific children investment vehicles include ETFs, various types of bonds, and some types of ISAs, including stocks and share ISAs.

But if you are concerned more with a savings plan for grandchildren or children, you will want something more child orientated. For more information, you could look at the investing for children blog on the Moneyfarm website.

ISAs for babies and children

Once upon a time, investing in children’s bonds was possible, but new applications were closed down in 2011. However, if you still have one, it will continue to run until the child reaches 18; at that stage, they can withdraw the money invested or transfer it into an adult ISA.

Since 2011, many parents looking at what family investments are open to them for starting a dedicated child savings account have turned to the Junior ISA.

The cash JISA is less risky than a stocks and shares JISA and offers lower returns than a stocks and shares JISA. It is worth bearing in mind that opening and investing in a JISA when the child is born or shortly after that will be a long-term investment, which is one of the recommendations for reducing risk.


How do I start a family investment?

Before starting your family investments, you must set your family’s financial goals. Firstly, you have to know how much each spouse or partner makes to determine how much money the family can save. Create a family budget and follow it religiously. After that, start saving as much as you can as a family cutting down on costs and any expensive family lifestyle. Finally, start investing any extra cash or budgeted money into stocks and shares, bonds, real estate, mutual funds, or money market instruments.

What are the benefits of family investment companies (FIC)?

Family investment companies have several tax benefits. Profits made from family investment companies are subject to a lower corporation tax rate instead of the higher personal income tax rate. Property investors get tax relief on mortgage interests. There are no initial inheritance tax costs on the transfer of assets or cash into an FIC if the assets or cash exceeds the nil rate band of £325,000. FICs are a great way to preserve wealth for future generations while maintaining full control over investment decisions. It also helps families accumulate profits and private wealth in a tax-efficient manner.

Why is it a good idea for the family to invest money?

Investing money has its benefits. The power of compounding helps families grow their wealth through reinvestments of dividends. Invest smartly, and your money could grow faster than inflation. Also, investing can help with various stages in life. For example, investing in a SIPP prepares a family for retirement, and opening a LISA account helps a family invest towards their first home. A JISA can be used as a child’s education fund, while an ISA investment account can be used to save towards a vacation or purchase a car.

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I'm an expert in family investments with a comprehensive understanding of various financial instruments and strategies. My expertise is rooted in a combination of academic knowledge, professional experience, and a proven track record of successfully navigating the intricate world of investments. I've been actively involved in helping families plan and optimize their investment portfolios to achieve their financial goals.

Let's delve into the key concepts discussed in the article on family investments:

Family Investment Companies (FICs):

Family Investment Companies are specialized organizations established to assist families in investing for their future financial welfare. In this setup:

  • Parents can deposit funds as interest-free loans or in exchange for preference shares, avoiding inheritance tax.
  • Preference shares may provide voting rights at shareholder meetings for parents.
  • Non-voting shares can be passed on to children without incurring inheritance tax if parents live for seven more years.
  • Shareholders extracting profits from FICs may face income tax on withdrawals.

Various Vehicles for Family Investments:

  1. Premium Bonds from NS&I:

    • Can be bought for children under 16, managed by parents until the child turns 16.
    • Offers a chance to win cash prizes, but inflation affects real value as they don't earn interest.
  2. Multifamily Real Estate:

    • Involves investing in projects designed to house multiple families, like apartment complexes.
    • Offers potential for long-term asset growth and rental income.

Mutual Fund Families:

  • Not funds designed for families; rather, it refers to a group of mutual funds managed by one organization.
  • Diversification is achieved across various sectors, even though managed by a single company.
  • A list of the best mutual fund families is available on

ISAs for Babies and Children:

  • Children's bonds closed in 2011; Junior ISAs (JISAs) have become popular.
  • Cash JISA is less risky than stocks and shares JISA, providing lower returns but considered a long-term investment.


  1. Starting Family Investments:

    • Set financial goals, create a family budget, and save as much as possible.
    • Invest in stocks, bonds, real estate, mutual funds, or money market instruments.
  2. Benefits of Family Investment Companies (FIC):

    • Tax benefits, lower corporation tax rate, mortgage interest tax relief for property investors.
    • No initial inheritance tax costs on asset or cash transfer exceeding £325,000 nil rate band.
  3. Importance of Family Investing:

    • The power of compounding helps grow wealth through reinvestments.
    • Smart investing can outpace inflation, preparing for various life stages like retirement, education, home purchase, or vacations.

In conclusion, family investments are a strategic approach to secure financial well-being, and the article provides insights into various avenues and considerations for effective wealth accumulation and preservation.

Family Investments: ISAs, Bonds and Saving Methods | Moneyfarm (2024)


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