Investing for Your Child’s Future: The Junior Investment Savings Account

Beginning November 1st, as a replacement for Child Trust Funds, Junior Investment Savings Accounts (ISA) will offer parents and grandparents the ability to put £3,000 away tax free for their child’s future. Unlike CTFs, Junior ISAs will not get any government contributions but they will still serve as a great opportunity for long term investments for young people. Fidelity International, one of the best Junior ISA providers, calculate that investing the maximum £3,000 each year could yield a child roughly £107,923 by the time of his or her 18th birthday, assuming an annual growth rate of 5%.

One of the major concerns for parents while investing in the name of their children is how easily a child can get a hold of these investments. Junior ISAs are locked until the child reaches the age of 18. Children are also limited on the amount of revenue they can shield from HM Revenue and Customs (HMRC). The ISA will serve as a great way to sidestep this limit.

As a a parent or a grandparent, Junior ISAs will serve as a great way to invest in a child’s future. When this child matures, so does the investment. The Junior ISA matures into an ISA and you have taught them the important of investing in the future.