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Answers to YOUR Questions

See what's bugging others. 

And what our experts say.

ISA | Personal Finance | Junior ISA | JISA

Where can I get a good Junior ISA?

Rebeccah, Greater London

27 March 2019

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Holly Mackay

You need first to decide where to get the Junior ISA (which is the wrapper) and then decide what to put in it – cash, stocks and shares, funds etc.

 

We’re a bit suss on Cash Junior ISAs – if you’re saving for a baby then we think the stock market is likely to do better over the long-term. However there are good rates available for cash Junior ISAs – currently Nationwide and Coventry are offering 3.25% but these do change so please check online for current deals.

 

Many parents choose an investment platform for their stocks and Shares Junior ISA. Have a look at which ones we suggest here: Hargreaves is not the cheapest but they offer decent value and they are big and solid. Cheaper, but still good options, are AJ Bell, Charles Stanley Direct or Fidelity.

 

These platforms all offer a wide choice of investment options to put in a Junior ISA, too wide for many novices. That said, there are plenty of tools to help you find the right option: recommended fund lists and so on. In general, people tend to be over-cautious with their children’s money. You may have 15+ years to invest. That gives you a long time to ride out the ups and downs of a stock market. I know that people don’t like the thought that the capital value could drop, but over the long-term, the stock market generally outperforms cash.

 

For those new to investment, multi-manager funds might be an option. These are like ready-meals versus choosing the ingredients and making the meal. For less confident investors, it takes some of the pain away from choosing individual stocks or funds. Many of the platforms have their own versions – see here from Hargreaves Lansdown, AJ Bell and Charles Stanley Direct.

 

A cheaper option would be the Vanguard LifeStrategy 100% option, available through the Hargreaves platform. This is a passive fund and costs 0.24% instead of the HL Multi-Manager 1.46%. Passive funds are where computers just pick the world’s biggest stocks in proportion to their size. And if oil is out of favour, well you still have the oil shares. And if retail is going gang-busters, well you don’t get any more than the proportionate weighting. You are buying the average.

 

Active managers cost more because they employ expensive people to make a bet on which stocks will do better – if they love M&S, they can buy twice as much of it. If they hate Easy Jet they can sell it all. Passive guys can’t do this. They have to hold what we call the ‘index weighting’ – if HSBC is 5% of the main basket of shares, the FTSE 100, they have to hold 5% in HSBC shares.

 

Finally, in terms of paying into your Junior ISA, it is worth setting up a direct debit every month. That way, you drip feed into these and run less risk of investing when the market is at its highest, through simple bad luck and bad timing.

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Investments | Saving | ISAs | Junior ISA

Hi. I’m 36 years old, earn £85k, and have about £40k savings in the bank, mainly in an old ISA that I’ve done nothing with. I am embarrassingly bad when it comes to savings and investments so keen for a steer. I have a five year old daughter and would like to put my savings somewhere clever so they start to do something useful by the time she starts at an independent secondary school and fees go through the roof. Any bright ideas please?

Milly, Berkshire

22 February 2019

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Catherine Morgan

Private school inflation rises are often far greater than your loaf of bread rises. Cash isn’t always best and planning ahead is key, so great timing to be thinking about this.  Fees increased by 3.4% last year and I can guarantee you aren’t getting that kind of return on your old ISA, which means your money is decumulating in buying power.

 

Your ISA options

You could retain the money in your own ISA (which would make sense as a higher rate tax payer as you won’t have any capital gains tax to pay, nor will you have to put it on your tax return). This also gives you control of the money. Other options such as Junior ISAs will only be accessible from age 18.

If your “old ISA” is in cash, consider the merits of transferring this to a stocks and shares ISA. You have more than the recommended minimum time to invest to be able to ride out the volatility of the markets. Over 7 years you could start off more adventurous with the view to reduce the volatility and risk as you come to the time when you may need to take money out to fund her schooling. If you are concerned about risk think about investing in lower risk investments such as government bonds. These are readily available on the market in ready-made portfolios that are easy to set up.

 

Other bits and pieces to be aware of

Some schools will have annual payments, some termly, so be prepared to withdraw the money at a time that suits you. Some private schools offer the option to pay in advance as a lump sum, known as ‘advance funding.’ This could protect you from hefty inflation rises on fees in the future and help you time a withdrawal.

Boring Money have some great resources for you to read to weigh up which investment proposition may be best suited to you. Once you have chosen an investment company, you would need to complete an ISA transfer form with them to transfer from cash to stocks and shares. This won’t affect your allowance for this year so you could continue to add to this investment in a very tax efficient way. (£20,000 for this tax year).

You should also consider making sure that you have a Will as the ISA is in your name but intended for your daughter. That way you have worst case scenario covered.

 

Pros and cons of Cash ISAs versus Stocks and Shares ISAs

Cash ISAs

  • Instant access (or after a fixed period)
  • Receive a variable or fixed interest rate
  • Great for emergency funds or short-term homes for savings
  • Readily available
  • Not great for long term growth potential
  • Poor interest rates

 

Stocks and Shares 

  • Much better opportunity to grow over the longer term
  • 1000’s of investment funds available at low cost
  • Investments ranging from low risk (yes you don’t have to accept high levels of volatility) to more adventurous
  • Access is normally gained within just a few days (gone are the old-style investment days of having no or ltd access!)

Finally, don’t forget to consider scholarships to help you with fees. Around 1/3rd of independent schools have funding for this.

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Personal Finance | JISA | Junior ISA

Can I move an old Child Trust Fund?

Suzanne, Greater London

08 May 2018

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Holly Mackay

Hi!

In 2015 changes came in that meant that as the parent you now have the choice of transferring to a junior ISA if you wish.

This was a victory to parents for these babies born between September 2002 and January 2011, as Child Trust Funds (CTFs) were a great idea but pay worse rates than junior ISAs, available for children born outside these dates.

Both accounts allow up to £3,840 to be saved tax-free. CTFs were set up with Government vouchers of between £50 and £250, but parents are not given vouchers to fund junior ISAs.

Money in a CTF or a junior Isa cannot be withdrawn until the child's 18th birthday.

Hope this helps,

Holly

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

JISA | Junior ISA | Investments

I would like to open a Junior shares ISA for my Grandson for about £50/month. How do I go about it and can you recommend some reliable companies? I intend to keep this going for approx 15 years, so am looking for some sort of 'Tracker' fund that does not need my constant attention.

Roger, Surrey

26 April 2018

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Holly - 066.JPG

Holly Mackay

Hi Roger,

Lucky grandson! If you assume average returns of about 5% after fees, those monthly payments of £50 could add up to about £13,500 after 15 years. And of course that will all be tax free. Perhaps just make sure his parents know that he will get this money at the age of 18 so they can have the necessary conversation as this approaches. Hargreaves Lansdown is the country’s main provider of Junior ISAs and they report that about 97% of these get rolled over into adult ISAs which is encouraging – I thought more would be cashed in and used to head to Thai beaches!

OK, you want a tracker fund which is sensible if, as you suggest, you won’t have the time or inclination to be constantly monitoring this. Spreading your bets around make sense so what the industry calls a ‘multi-asset’ fund will get you the investment equivalent of a balanced meal – as the name suggests you’ll have a blend of shares and other investments from all over the world.

I normally try and give people a few options but for your needs there is a simple no-brainer option. Vanguard. The low-cost US Kings of tracker funds who now let British investors get a Junior ISA directly from them.

I suggest you pick one of their LifeStrategy funds. There are 5 choices – from very low-risk and cash like to the most volatile which is all held in shares. Given your timeframe which is 15 years I think you should be looking at the 80% or 100% equity options but read up on the differences between the options and make your own mind up, based on how comfortable you feel. As I suspect you know, making money is not guaranteed although over 15 years history strongly suggest you’ll outperform cash.

If you want other choices have a look at our Best Buys tables and filter by Junior ISAs. Another thing to bear in mind is this – if you or your children have an online investing account, then you might be able to link up the JISA account so you can see it on the same log-in. This is called ‘householding’ your investments and can make it more convenient to manage. But although you can pay in, a final note is that it has to be the parent or legal guardian of the child who actually opens the account for them. Once open, anyone can pay into it.

Good luck,

Holly

 

 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

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