The Journey of a Junior ISA

Journey of a Junior ISA

Life is full of ups and downs and now more than ever what is certain is that we are facing uncertain times. But if you are a parent what you can’t help but notice is that your child doesn’t stop growing. What is also true is that you want them to get the best start in life. So what can you do to give them a headstart? 

A Junior ISA can be used to teach your child the value of money from an early age. And, a Junior ISA, from The Children’s ISA, is accessible online so you, and your child can keep track of the funds. By enabling your children to see what’s happening with their money could this be a good way to teach them about wants and needs and spending and saving? 

A Junior ISA can only be opened by parents but one of the benefits is that any number of friends or family members can pay in. As an illustration, if you as a new parent, paid in £100 a month from birth and based on a projected return of 5%* the investment could be worth around £15,500. If a generous grandparent, say, added £50 to that a month from birth the fund would be up to over £23K. That’s a substantial amount of money for any ten-year-old!

It’s no secret that our landfill sites groan with plastic and our oceans are full of junk. As many parents can attest to Christmas or birthdays can often involve a child playing with a toy once only for it never to be seen again after the batteries have run out. So could those generous grandparents who want to spoil their grandchildren split their gift between toys and an investment? OK, so saving money won’t give the little one the sugar high of the latest ‘it’ toy but when they reach 18 they will probably appreciate funds for university rather than a cuddly unicorn. 

When your child turns 16 their attention will, more than likely, start to turn to their tertiary education, leaving school and getting a job or perhaps learning how to drive. The Times Education Supplement estimate that a standard 3-year university course will cost between £35 and £40K. Coincidentally, saving £100, based on a projected 5% growth per annum should result in an investment pot of £35K. Imagine your child being able to leave university debt free? So instead of paying off the last three years, they could be saving up to buy a house for the next 30 years. 

Before investing in a Junior ISA, you will need to bear in mind that your child will not be able to touch the funds until the age of 18. Funds from Junior Cash ISAs (much like their adult contemporaries) can be accessed but the drawback is the projected interest rates will typically be pinned to the bank’s interest rates and, for the last ten years, these have been unfavourable. So ultimately if you are looking for a long term investment vehicle to give your child the best start when they reach adulthood, a Junior ISA is the smart saving option. 

* Past performance is not necessarily a guide to future performance and the value of your investment may fall as well as rise, and any income received in the form of dividends may fluctuate. You may not get back the full amount when the account is closed. If paying regular monthly contributions please bear in mind that if contributions are not maintained you will be less likely to achieve the investment amount that was originally projected.

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