3 things to consider when choosing a Junior ISA in the 2020/2021 tax year
If you are thinking about saving for your child’s future by opening a Junior ISA and are not sure where to start, here is a short checklist of points to consider, to help you along the way.
How long would you like to save for?
You should consider the length of time you will be saving for versus how much you can regularly put away each month or year. The younger your child is when you open a Junior ISA, the more time you will have to reach your savings goal for them.
Which type of Junior ISA is right for you?
Junior ISAs are available as Cash ISAs or Stocks & Shares ISAs and the maximum amount you can invest during the current 2020/2021 tax year is £9,000.
Here at Foresters Friendly Society, our Junior ISA is invested in our with-profits Order Insurance Fund which entails less risk than a Junior ISA that is invested solely in equities since the money is invested across a balanced mix of assets including property, government bonds, and equities. It also offers the potential for higher returns than a cash ISA but has higher risk associated with it. You should also be aware that depending on investment conditions you may not get back the value of your original investment and that inflation will affect what your child can buy when they cash-in their Junior ISA.
Have I left it too late?
A Junior ISA can be opened for a child until they turn 18 so it may not be too late to start saving for their future, no matter how big or small. Even if your child is 13 and you put away £26 per month, it would amount to £1,560 before any growth or returns. This could help them with anything from learning to drive to paying towards the costs associated with higher education. Children aged 16 and 17 can open a Junior ISA themselves.
If you’re interested in opening a Junior ISA for your child and want to find out more about how it works then request an information pack today!
Tax rules may change in the future and depend on individual circumstances.
This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.