Bank of mum and dad, start your kids saving with a Junior ISA

bank of mum and dad richie rich.jpg

Why a Junior ISA is a great account to start with

Tax-free savings of up to £4,260 a year per child (£4,368 from April 2019)

• Easy to get started with as little as £25 a month

• Choice of either cash or shares 

• The kids can’t touch the money until they turn 18


• Chance to teach the kids about saving and the stock market

• Grandparents can easily pay in to a child's ISA too 

• Gives them a head start with uni fees, driving lessons or other adult expenses


Cash or shares: which will grow our money more?

A Junior ISA savings account is effectively just an empty tax-free wrapper. When it comes to what goes inside, you have a choice between cash and shares.

60% of the UK’s Junior ISAs are in cash. But, really, we think that’s got a lot to do with people fearing the stock market. “It’s too risky,” they might say. But we disagree. When you have a timeframe of 10 years or more to invest, the risk of shares is minimised because you’re in no rush to withdraw your money – you can ride out the highs and lows of the stock market tide.

Over a 10-year period, shares grow more than cash 9 out of 10 times. Over an 18-year period that rises to 9.9 out of 10.


Who should I open my children’s Junior ISAs with?

If you want control over what you invest in…

Many parents choose an investment platform over a bank for the wider choice of investment options. Hargreaves Lansdown is a popular choice – not that cheap but decent value with a good track record. Other mid-range options are AJ Bell Youinvest and Fidelity.


If you want to invest but aren’t too confident…

Funds are going to be your friends. These investment ready meals are available through most platforms and take out most of the legwork. We recommend one of Vanguard’s LifeStrategy funds or one of Fidelity’s ready-made options. Alternatively, use a robo-advisor like Wealthify or Wealthsimple to manage it all in a sleek, simple app.


If you’re really set on a cash ISA…

A price comparison site will be able to show you the best child ISA interest rates on offer and what else you’re signing up to – some accounts may have bonuses or minimum payments to consider. As it stands, the best rates on the market are 3.6% from Coventry Building Society, 3.45% from Danske Bank, and 3.25% from TSB.


Use our Best Buys filters to compare customer ratings and expert reviews of 15 Junior ISAs.


Help them save now or bail them out later

Last year, research by Legal & General showed that 2 in 3 UK parents are still having to help their children out financially when they reach their 20s, 30s and 40s. 1 in 4 of these parents are forking out over £1,000 a year. And, according to Aldermore, if your adult kids still live with you it could cost around £5,000 a year in extra food, petrol and energy bills – a shocking £20 billion across the nation.

Now we’re not saying you’ll avoid all these big-ticket expenses simply by chucking a few quid away each month until your kiddos transform into grown-ups, but it can’t hurt to try. Besides, if they have a decade or so to earn interest or grow an investment in their Junior ISA, the money you chuck in now will likely be worth a heck of a lot more when they come to take it out again. Well… unless by that point we’re paying with shells and bottle caps after the ice caps melt or the machines take over. But for now that seems unlikely.


For more parental pearls of wisdom, check out our Tired Parents learning path and Junior ISA guide.

What's next?

Join the thousands of people who get our weekly musings on money, great products, top tips and a dollop of opinion.

Sign up to Holly's Blog

Want to know more?

limbo stocks.jpg

Holly's top picks: hottest stocks and shares ISAs 2019

Cash ISA interest rates are lower than limbo. To really put your savings to work, it might be time to consider a stocks and shares ISA. Holly picks her favourites for beginners and pros.

Hottest stocks and shares ISAs 2019

spyro millennial pension.jpg

Millennials, your pension craves attention! Here's how to get started

You're probably tired of hearing how screwed millennial finances are. We already know – we live it every day! So this time, how about some practical advice instead? Let's talk pensions.

Millennials, your pension craves attention! Here's how to get started

Learn the Tribal Way

What have other people been doing? Learn from their experiences.

If you're more clued up about Peppa Pig than private pensions but can't find the time to decipher all the financial lingo, you could be a Tired Parent. Read our guide for quick and easy advice on life insurance, wills and nest eggs for the little ones.

Tired Parents


No Comments Yet

Leave Comment

Related Questions

Got a Question?

Sign up for Holly's blog

Stay up to date

Our free weekly blog with Holly's
no-nonsense opinions, tips & food for thought.
If you change your mind, you can unsubscribe at any time. We'll never share your details and you can unsubscribe any time.