The Smartest Way to Invest for Your Child’s Future
Apr 06, 2025Hello Stoic Investors,
Today, I want to reply to a post I came across on Reddit — and I hope that if you're in a similar situation, this will help you too.
Here's what the post said:
What’s the Best Account to Invest for Your Child?
This is such a thoughtful and powerful financial decision — and the good news is that you do have two main options to consider, depending on what matters most to you:
Tax benefits or control.
1. Junior Stocks & Shares ISA
A Junior ISA is a tax-free investment account designed specifically for children under 18.
Parents or guardians can open it and invest up to £9,000 per year, and any gains (capital growth, dividends, interest) are completely free from tax.
You choose how to invest the money until the child turns 18 — at which point they take full ownership of the account.
If you're comfortable with that transition, this is by far the most tax-efficient way to build a fund for your child.
2. General Investment Account (GIA)
A GIA is a standard investment account for adults, with no specific tax benefits — but also no restrictions.
You can invest unlimited amounts, stay in full control, and access the money at any time.
While you may have to pay capital gains or dividend tax once your earnings exceed the annual allowance, a GIA allows you to hold the money in your name and decide when (and if) to pass it on.
It’s ideal if you want to give your child access to the money later — say at 25 or 30 — or keep flexibility in case your situation changes.
How to Choose Ethical and Environmentally Responsible Investments
If you want to invest in companies and sectors that don’t profit from weapons, fossil fuels, exploitation, or environmental harm, there are several types of investments you can consider that follow ESG (Environmental, Social, Governance) or SRI (Socially Responsible Investing) principles:
ESG investing focuses on selecting companies that meet higher standards in how they treat the environment, how they manage people and communities, and how transparent and ethical their leadership is.
SRI goes a step further by actively excluding entire industries considered harmful or unethical, such as tobacco, arms, oil, or companies involved in child labour or deforestation.
The most common ESG- or SRI-aligned investment options are ETFs, mutual funds, and individual stocks — each with different levels of effort, control, and diversification.
1. ETFs (Exchange Traded Funds)
They are one of the easiest and most efficient ways to invest ethically.
They’re low cost, broadly diversified, and many of them apply ethical screens automatically.
For example, the iShares MSCI World SRI or Vanguard ESG Developed World All Cap include hundreds of companies selected based on sustainability and human rights standards.
2. Mutual funds
They can follow similar filters, but they tend to be actively managed, which means higher fees and often less transparency.
Unlike ETFs, which typically track an index and clearly list their holdings, mutual funds are managed by a team that makes active decisions about what to include and when to buy or sell.
This can sometimes lead to better performance, but it also introduces more subjectivity, and the fund’s exact composition is not always as easy to monitor day by day.
3. Individual Stocks
Finally, some investors prefer to build their own ethical portfolio by picking individual stocks — companies they’ve researched personally and feel aligned with.
This option gives you full control, but it also requires a deeper time commitment, ongoing research, and comes with more concentrated risk.
A stock like Ørsted, which focuses on renewable energy, might be a strong candidate in this case.
That said, it’s important to remember that this is only a general strategy, meant to offer a full picture of what’s available.
Every investor has different goals, constraints, timelines, and values — and what works for one person might not work for another.
Before making any decision, you should take time to define your objectives and assess your situation properly.
To help with this, platforms like JustETF and Morningstar UK are excellent for comparing funds, while Sustainalytics is a great resource for analysing individual company ESG scores.
These tools can give you clarity on what each option includes, how it performs, and how well it aligns with your values.
So, note down these three key-points and start investing today:
1. A Junior ISA is the most tax-efficient way to build long-term wealth for your child — but they’ll take full control at 18;
2. A General Investment Account gives you flexibility and control beyond 18, but without the tax advantages of an ISA;
3. Choosing ethical and sustainable investments means aligning your money with your values — and ESG and SRI strategies offer great ETFs, funds, and tools to help you do it.
