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18 Nov 2019

How To Invest For The Children In Your Life

Since ancient times, it has been customary to plant a tree when a child is born. The tree is a reminder of the loved one who planted it for her. In modern times where many families are split across the world, planting a tree may not be practical. But as ARLENE THOMPSON explains, seeding an investment account for your child, godchild, grandchild, niece or nephew is easy.


By seeding an investment account for a young child, you are giving the investment a long time to compound meaningfully. Perhaps to fund a first car? Or for tertiary education?

While the financial rewards are obvious, real value comes in talking to the child about the investment to nurture a lifelong savings habit. Encourage the child to add to the investment with some birthday or pocket money. Matching the child’s small contributions is an extra incentive and boost to her investment account. Use your investment statements and Foreword newsletters as a reason to talk to your children about investing.


Only the child’s parent or legal guardian may open an account in the name of a minor (under 18 years). Unless the child is registered for income tax, the parents are taxed on any income accruing from their donation until she reaches maturity. The child legally becomes the full owner of the account on turning 18.

Alternatively, you may decide to open a sub-account in your own Foord unit trust investment designated for a child. In this case, the account holder continues to own and operate the account, but the Foord statements will display the sub-account separately. You can donate the units to an account in the child’s name when you are ready. Remember to make provision for this sub-account in your will.

The investment can be in the form of a once-off lumpsum or a monthly debit order commitment. It can of course be added to over time. If the investment is in the child’s name, it can only be redeemed into the child’s own bank account.

Gifting unit trusts may have capital gains and donations tax consequences for the donor. Please consult your tax practitioner for more information on the tax consequences of donations to minors.

For more information contact the Foord Unit Trusts team on 021 532 6969 or


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