Investing money for your child’s future is a great idea, but it can be difficult to find the right investment scheme or account that will give you a good return, and keep the money safe until your child is an adult.
Junior ISAs were created to help parents and guardians save for their child’s financial future, but many people don’t know about them or know enough to feel comfortable investing. Here in this quick guide, we are going to cover the basics about Junior ISAs, and why they are such a good option if you want to save for your child’s future.
What Exactly is a Junior ISA?
Junior ISAs are long-term savings accounts that can be opened by a parent or guardian for their child. When the child turns 18, they can access the money and spend it however they wish.
Aside from the age limit on applicants, Junior ISAs work pretty much the same as an adult ISA. Many parents choose a stocks and shares ISA for their children, because it offers the potential for strong returns and a convenient way to capitalise on potentially lucrative stock market fluctuations.
The stocks and shares Junior ISA accounts have the potential to give a higher rate of return on your investment, increasing the amount of money your child will receive at age 18. The value of the account can fall as well as rise, however, depending on the performance of the stocks and shares the scheme invests in. Find a quality stocks and shares ISA, like those offered by Willis Owen, to ensure that your child has a nest egg that they can use to secure their future.
How Much Could My Child Receive?
This greatly depends on how much you invest and over what time period. Many parents and guardians may choose to open a Junior ISA for a child on their birthday, which is a great idea.
If you open an account for a child’s fifth birthday, for example, then you will be making a thirteen-year investment. Money should be deposited in the account every month to help the fund grow. Just £10 a month at a growth rate of 5% a year after any charges will give your child just around £2000 when they are 18 years old, which could help them pay university fees, or be used as a deposit on a rented flat for instance.
Investments in the stocks and shares Junior ISA could yield a higher rate of return, but the value could also fall if the stocks and shares do not perform well.
How Can You Invest in a Junior ISA?
Anyone can invest in a Junior ISA with a number of different providers. Most accounts are very similar, but different suppliers may offer different features and incentives to their customers. Explore all of the options before you choose an account, so that you can find one that suits your requirements.
You can learn more about the pros and cons of Junior ISAs at willisowen.co.uk. Willis Owen can help you to find a stocks and shares Junior ISA that suits your investing needs and appetite for risk. Make sure you thoroughly research all of the solutions available to you and your child so that you can make the best investment for their future.
Who is Eligible for a Junior ISA?
Only parents and legal guardians can open Junior ISAs for a child, but once it has been opened, in some accounts anyone can make payments to the account. The only person that can draw funds from the account is the child named on the ISA account after their 18th birthday.
The ability for anyone to make payments to the account makes them perfect for family members like grandparents, uncles, and aunties to make investments in your child’s future and know that the money will be looked after until they are old enough to spend it wisely. If your account doesn’t allow for third-party contributions, then the parent or legal guardian can add the money into the account on behalf of kind friends and family who want to contribute towards their child’s future.
Any child under the age of 18 can have a Junior ISA opened in their name, as long as they are a UK resident. Children who have a Child Trust Fund account in their name may not be eligible, but these accounts can be converted into a Junior ISA.
Junior ISA accounts provide the perfect opportunity for you and your family to invest money for your child’s future. By choosing the right account for you and your child, you can ensure they get a lump sum that can help them get a great start in life when they become an adult.