Building a secure financial foundation for your children is a priority for many Australian families. With the cost of education, housing, and general living on the rise, more parents are turning to junior securities as a way to give their kids a head start. But what exactly are junior securities, and how have recent policy updates in 2025 changed the landscape?
Understanding Junior Securities: More Than Just a Savings Account
Junior securities refer to financial products held in trust or managed on behalf of a child or minor. These can include junior savings accounts, managed funds, ETFs, and even shares. The goal? To build a nest egg that can be accessed when the child reaches adulthood, typically 18 years old.
Unlike traditional savings accounts, junior securities often offer higher growth potential but come with some risks. Here’s how they differ:
- Junior savings accounts: Low risk, but returns are usually limited to standard interest rates.
- Minor’s share trading accounts: Enable investment in ASX-listed companies, but require adult trustees until the child turns 18.
- Managed funds for minors: Diversified portfolios managed by professionals, often with tax benefits and regular reporting.
In 2025, Australian banks and investment platforms have streamlined account opening processes for junior securities, thanks to regulatory changes from ASIC. It’s now easier than ever to start investing for your child, with online verification and digital trustee arrangements becoming standard.
2025 Policy Updates: What Parents Need to Know
This year, the Australian government introduced several new regulations affecting junior securities:
- Taxation: The ATO has simplified rules for minor accounts, with the first $1,500 of investment income tax-free for minors (up from $1,200 in 2024). This helps families grow wealth without being penalised by punitive tax rates that previously applied to ‘unearned income.’
- Financial literacy requirements: ASIC now encourages providers to include educational modules for both trustees and beneficiaries. This aims to boost financial literacy from a young age and ensure responsible management.
- Transferability: When a child turns 18, junior securities can now be transferred tax-free into their own name, streamlining the transition to adulthood and full ownership.
These changes make junior securities more attractive than ever, especially for families looking to maximise after-tax returns and teach kids about money management.
Getting Started: Practical Tips for Australian Families
Ready to set up a junior security for your child? Here’s how to make the most of the latest developments:
- Choose the right product: Consider your child’s age, your risk tolerance, and your long-term goals. For young children, diversified managed funds or low-fee ETFs may offer the best balance between growth and risk. Teenagers might benefit from direct share investing under adult supervision.
- Compare fees and features: In 2025, new digital-first providers have entered the market, offering ultra-low fees and app-based management. Compare these with traditional banks to ensure you’re not paying more than you need to.
- Monitor and educate: Use the financial literacy resources now bundled with most junior security products. Engage your child in tracking their investments and understanding concepts like compounding, risk, and diversification.
- Plan for tax: Take advantage of the new $1,500 tax-free threshold, but keep an eye on income levels if you plan to make large contributions. Consider consulting a tax professional if you expect significant investment growth.
For example, the Smith family in Sydney set up a junior managed fund for their eight-year-old daughter in 2023. Thanks to the 2025 policy changes, they’ve seen improved after-tax returns and their daughter is learning about investing through the fund’s educational modules. By starting early and contributing just $50 a month, they project a healthy sum by the time she reaches 18.
Risks and Considerations
No investment is risk-free. Junior securities are subject to market volatility, and parents must act as responsible trustees. Consider these potential pitfalls:
- Market risk: Especially with shares and managed funds, values can fluctuate. Diversification and a long-term outlook help manage this.
- Changing regulations: While 2025 policies are favourable, future governments may alter tax treatment or account rules.
- Access restrictions: Funds are typically locked until age 18, so ensure you won’t need to access the money for emergencies.
Conclusion: Start Early, Invest Wisely
Junior securities are more accessible and tax-effective than ever in Australia, thanks to 2025 reforms. By starting early, choosing the right products, and engaging your child in the process, you can lay the foundation for financial confidence and independence. With careful planning and a little financial education, today’s kids can become tomorrow’s savvy investors.
