Junior
ISAs
were
launched
on
November
2011
to
replace
Child
Trust
Funds,
so
are
about
to
enter
the
teenage
years.
These
accounts
are
an
increasingly
popular
way
for
parents
(and
grandparents)
to
build
up
a
nest
egg
for
young
people,
who
are
faced
with
high
housing
and
education
costs
at
the
outset
of
adulthood.
Things
to
Remember
About
JISAs:
•The
annual
allowance
is
£9,000
for
each
child,
who
must
be
under
18
and
living
in
the
UK.
•
It
can
only
be
opened
by
the
child’s
parent
or
legal
guardian,
but
can
be
paid
into
by
grandparents,
friends
and
other
family
members.
•
Like
adult
ISAs,
the
Junior
ISA
can
be
invested
in
either
stocks
or
cash
and
you
can
have
two
providers
in
the
tax
year,
but
not
two
of
the
same
type
•
The
savings
rates
on
Junior
ISAs
are
often
higher
than
for
adult
ISAs
–
current
best
buys
pay
around
4%
•
A
parent
or
child
can’t
dip
into
the
JISA
(probably
for
the
best)
•
If
you
have
a
Child
Trust
Fund
open
for
your
child,
you
can
transfer
this
to
a
JISA
Building
Nest
Eggs
With
a
potential
18-year
investment
horizon
for
a
Junior
ISA
(if
you
start
the
year
the
child
is
born),
the
numbers
can
start
to
look
seriously
impressive.
A
parent
of
a
child
born
today,
putting
in
the
full
amount
of
£9,000
in
cash,
would
save
a
staggering
£162,000
over
18
years
–
that’s
without
any
interest.
If
you
invested
the
money
and
it
grew
at
6%
a
year,
the
child
would
have
almost
£300,000
by
their
18th
birthday.
Even
accounting
for
inflation,
that’s
a
serious
amount
of
money
that
could
go
towards
a
first
property,
university
fees,
or
first
car.
And
because
the
JISA
allowance
is
so
generous
(and
few
parents
will
be
able
to
max
it
out)
parents
of
older
children
can
catch
up
with
any
“lost
years”
by
topping
up
the
full
£9,000
when
they
can,
perhaps
through
an
inheritance,
when
downsizing
or
money
saved
during
lockdown.
Investing
in
Stocks
for
Children
According
to
the
most
recent
HMRC
figures
(for
2021/2022) £1.5
billion
was
subscribed
to
Junior
ISAs.
Some
42%
was
targeted
towards
cash.
Average
subscriptions
were
just
over
£1,229.
Even
though
some
parents
are
still
keen
not
to
take
a
risk
with
their
children’s
money,
many
advisers
recommend
weighting
their
Junior
ISAs
towards
equities
to
take
advantage
of
the
longer
time
horizons.
Over
time,
inflation
can
make
a
serious
dent
into
even
the
largest
nest
egg,
while
equities
generally
outperform
other
asset
classes
over
periods
of
10
years
or
more.
They
May
Be
Junior,
But
It’s
Their
Money
One
aspect
of
Junior
ISAs
that
should
be
noted:
while
the
parent
is
making
all
the
investment
decisions
initially,
the
money
is
legally
still
the
child’s
–
so
at
18,
they
have
the
choice
to
spend
it
how
they
wish
(or
ideally,
even
keep
it
where
it
is,
and
let
those
returns
compound
over
many
decades).
The
child,
upon
reaching
16,
can
take
control
of
the
account
but
can’t
withdraw
the
money
until
they
are
18.
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