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Raising a child in today’s economic environment is no small task, but if you’re like me, you may be worrying about their job prospects, among other things, in the future. As such, a savvy parent may want to consider investing today for their child’s future second income.
A Junior Stocks and Shares ISA allows tax-free investing on behalf of a child, with access granted at age 18. By contributing £250 per month from birth, and achieving an average 10% annual return, the account could grow to over £565,000 by the child’s 30th birthday.
This is the quiet power of compounding in action. This is where returns earn further returns over time. In this scenario, the investor contributes £90,000 over 30 years, yet growth adds more than £475,000 to the final total.
With a pot of that size, drawing 5% annually — potentially by investing in dividend-paying stocks — could produce a £28,000 second income, all without needing to touch the original capital.
Nothing is guaranteed, but consistency pays
Of course, markets fluctuate and 10% returns aren’t guaranteed every year. In fact, many investors lose money in the short term. But over decades, equity markets have historically rewarded patient, consistent investors — especially when costs are kept low.
This approach doesn’t require picking the next big tech stock or timing the market. It simply involves regular contributions, long-term thinking, and the discipline to stay invested through volatility.
For parents or grandparents able to start early, a Junior ISA offers a rare opportunity to compound wealth tax-free. It’s not just about money. It’s about giving the next generation choice, freedom, and financial resilience. None of us want to see our children struggle.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Where to invest?
Salesforce (NYSE:CRM) is a stock I’ve highlighted before, and it remains one I believe is well worth considering — especially for long-term investors focused on growth and innovation.
The cloud-based software giant is trading at just 23.2 times 2025 earnings. This potentially falls to 14.9 times by 2029. That’s with double-digit EPS growth projected across the next four years, including 14.7% in 2028. For a company of this scale, that’s impressive. In turn, the price-to-earnings-to-growth (PEG) ratio is around 1.2, which represents a 34% discount to the sector average.
With $17.4bn in cash and a net cash position, Salesforce has flexibility — especially to invest in AI and expand its platform. Its enterprise customers are also deeply embedded, creating strong switching costs and recurring revenues.
Importantly, Salesforce is already rolling out AI-driven features across its suite. This includes automated sales insights to generative customer service tools. However, given the slowdown in its core enterprise technology business, it’s key that Salesforce leverage’s its position for dominance in AI. If it doesn’t, the stock could really pull back.
Nonetheless, the valuation offers a margin of safety. For investors seeking exposure to the AI productivity trend without paying nosebleed valuations, I think Salesforce is a high-quality option to think about.
