Junior shares ISA for grandson
29 June 2017
Question by Roger
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.
Answered by Holly Mackay
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.