Share Trading for 16 Year Old

[StillFedUp]

Hi All,

It's been a long time since I've been here. Good to see some familiar names around.

My oldest has just turned 16. As a result her bank account is being changed from a high interest child account to an easy access (zero interest) adult account.

I've been looking at options to keep it in cash earning a reasonable interest rate but there is nothing out there. She already has a JISA (that she knows nothing about until she's 18) rolled over from an original CTF which I have contributed to every year (not the full allowance) invested in trackers that she won't get access to for another two years.

I would like to introduce her to the stock market where she can invest some of her savings account in stocks and shares. The obvious solution is micro-investing on a platform like Trading 212, but then I found she needs to be 18 to have her own trading account.

So is there a way I can open a trading account for her (trading small amounts) but ensure that it doesn't look like it's my account (it will be her tax liability on profits if any), or can she have a second stocks and shares JISA with her unused JISA allowance? The tax benefits aren't important at the moment but all the information I have found about children investing in stocks and shares recommends a JISA opened by the parent, but as she already has one, this doesn't help me.

TIA

SFU

[seagles]

Although she already has a JISA, she could still start managing it herself and adding any money (up to the limit).

I did a quick check of the brokers I use and 18 seems the minimum age to create a trading account.

[StillFedUp]

Thanks for the reply, but the JISA has a high value and she doesn't know anything about it yet.

Her financial education continues one step at a time and knowing she has this future windfall may affect her current thinking.
She has only just been made aware of this child savings account that has been funded by her grandparents for the last 16 year but that has a value only about 25% of the JISA. That's enough for her to know at the moment.

In two years time she should have matured further in her financial knowledge and will then have to be trusted with much more. Trading small amounts with limited funds now is a good next step.

SFU

[Urbandreamer]

I think that "legally" it is not possible to do exactly what you want.

I was advised so when trying to do so with my 16 year old, recently by the broker.

HOWEVER you can do the next best thing.
As long as you are technically in control of the purchases and sales then you can involve your children in the decisions and actions.
I have helped my children pick investments and got them to actually buy and sell them online. Sure they pressed the button, but it was still under my authority (I was watching), so legal.

My 16 year old has very limited interest. His elder sister significantly more, though she's now over 18.

I picked two investments for them and got them to select one from an list of options in an area that interested them.
This was done in a stocks and shares JISA and we are talking modest sums rather than micro investments.

[AJC5001]

So is there a way I can open a trading account for her (trading small amounts) but ensure that it doesn't look like it's my account (it will be her tax liability on profits if any), or can she have a second stocks and shares JISA with her unused JISA allowance? The tax benefits aren't important at the moment but all the information I have found about children investing in stocks and shares recommends a JISA opened by the parent, but as she already has one, this doesn't help me.

TIA

SFU

Hargreaves Lansdown seem to say that their Junior SIPP can be opened by a 16YO.
https://www.hl.co.uk/pensions/junior-sipp
"Start a Junior SIPP
A Junior SIPP can be opened by completing our simple application form. If your child is over 16 they will need to sign the application, otherwise it will need to be signed by a parent or legal guardian.

You must also complete a Legal Guardian form if they are under 18."

Not having access until age 57 (or more in future) may be a disadvantage, though - as might HL fees of 0.45%. No doubt other providers nay also have Junior SIPPs.

Adrian

[StillFedUp]

So the trading account would need to be in my name?

But then I would need to declare any profits on my tax return which would then be taxable - even though the investment and the profits would belong to my child. The 16 year old had their own tax allowance which would easily accommodate any profits she would make.

SFU

[PinkDalek]

So the trading account would need to be in my name?

But then I would need to declare any profits on my tax return which would then be taxable - ...

I may be misunderstanding and haven’t studied the entire thread but does this cover your needs?:

https://www.youinvest.co.uk/investing-for-children/dealing-accounts-for-children


Dealing account for children

An alternative way to invest for your children which gives you greater control over how and when you and your child can access the money is to set up a ‘bare trust’ dealing account. These are dealing accounts for the child with the parent or grandparent as the trustee. ... The account can stay open beyond the child's 18th birthday. You will still remain the account holder (unlike with a Junior ISA). However, because it's a bare trust, the child is legally able to ask you for the money.

[StillFedUp]

That looks like it might tick some boxes, and the JISA is already with YouInvest.

But at £10 a trade for shares it lends itself to larger trades and infrequent trading.

Some of the new micro-trade platforms have no charges (wider spreads to cover their costs), allow for fractional share purchases for very expensive shares, etc. For a bit of tinkering in the stock market it would be useful if they offered a similar bare trust product.

Maybe she will need to start with funds at £1.50 a trade and learn about trackers vs. managed funds first before delving into individual companies.

Thanks,

SFU

[Urbandreamer]

But at £10 a trade for shares it lends itself to larger trades and infrequent trading.
......
Maybe she will need to start with funds at £1.50 a trade and learn about trackers vs. managed funds first before delving into individual companies.

Thanks,

SFU

If you use the "regular" investment route then the costs are £1.50 to buy most individual company shares. After the purchase just cancel the instruction.

However IMHO it's worth paying the £10 and even accepting that money may be lost for the lessons that are learned. My daughter found the process of asking for a quote and having 15 seconds to ok the trade very stressful. She liked the idea of placing instructions to buy using "regular investment" far more.

FWIW I got each of them two Investment trusts and got them to select a company that interested them.
The investment trusts were CTY and SMT.
The daughter chose ABF (Primark), while my son chose FDEV (Games).

Over the last two years their portfolios have done fairly well on the whole. Recently my son and I top-sliced his SMT holding and invested the funds in PHI.

[PinkDalek]

That looks like it might tick some boxes, and the JISA is already with YouInvest. ...

On the latter (which isn't the subject of this thread) you may wish to look at the Brokers and Share Dealing board, where AJ Bell's changed charging arrangements wef 1 January 2021 are presently being discussed:

https://www.lemonfool.co.uk/viewtopic.php?f=26&t=26504

Incidentally, whilst here, if you feel your Topic on here How Do I Invest would better fit the Brokers board, let the Mods know by reporting one of the posts on here and ask (using the exclamation mark button).