In todays video we will be going through the benefits of investing for your children in either a Junior Investment ISA or a Junior Cash ISA.

It costs £232k to raise a child to the age of 21 (Centre for Economics and Business Research) and this figure doesn’t include any potential University fees. I personally have two young children and have opened them both up Junior ISAs top save for their future. I have no idea if they’ll want to go to university, or start working or even do an apprenticeship but it’ll be nice to have a nest egg set aside for them when they turn 18. A junior ISA can’t be accessed until they turn 18.


A parent or guardian can open a junior ISA but anyone can pay into it. So for example with Christmas coming up instead of grandparents buying the kids tons of toys they could choose to pop £10 into their Junior ISAs. You can put up to £9000 into a Junior Isa each ta year and any gains that are made are not taxed.

The difficulty can come down to which type of Junior Isa is right to open for your children because you can choose either a Junior Cash ISA (which is currently the most popular with 2/3 of Junior ISAs being opened being cash ISAs last year). Or an Investment ISA.

It might come as no surprise that I made the decision to open a Junior Investment ISA for my children. There are many different providers but I went with Hargreaves Lansdown.

As I will be investing the money for the long term for my children as the money cannot be accessed until they’re 18 that I wanted to benefit from the returns I would see from the stock market rather than the potentially lower percentage returns you might see for a Cash ISA.

According to calculations provided by AJ Bell, £100 invested monthly into a cash ISA over the last decade would today be worth £12,680, the same amount invested into an Investment ISA into a basic FTSE all share would be worth £16,316. Obviously you could have chose to make different investments in their Junior Isa, which could have returned higher or lower results.

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DISCLAIMER

Any information given in this video is for entertainment purposes only, and does not act as legal or financial advice. Your financial decisions are your own responsibility, and if you do require advice please contact a qualified Financial Adviser or Financial Planner.

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