23rd September 2021

Saving options for children

As you celebrate the arrival of a newborn into the family it’s a time for joy and celebration. However, the sooner you start saving for your child, the sooner you start setting them up for their future. 


By putting some money away regularly, you will be building a financial platform for them to access as they reach adulthood, which they can put towards their life goals. With many saving vehicles out there, today we’re comparing three popular options. 

Junior ISA

A great savings option, this works just like a regular, adult ISA. A legal parent or guardian for the child under the age of 18 can open a Junior ISA, when the child reaches 18 your child will have full control of the funds, leaving them with the option of spending or reinvesting the amount. 


A major plus of saving with a Junior ISA is that all money is tax-free. The maximum you can pay into a Junior ISA is £9,000 in 2021-22. Another bonus is that you can choose between cash or a Stocks & Shares ISAs, selecting an option that is most suitable for you and, most importantly, your child. 

Premium bonds

Premium bonds are a popular investment option. With them, you can buy any amount of bonds between £25 and £50,000, with this every month every £1 bond is entered into a prize draw with prizes for £25 upwards. The amount you can win is up to one million pounds, and all winnings are tax-free. However, it is worth bearing in mind that as of December 2020 the chances of winning have reduced 1.4% to 1%*. This means investing in premium bonds is now much more in line with investments offered by high street banks and building societies.

Junior ISA vs. Premium bonds

Both options allow family and friends to pay in, which is useful as an alternative birthday gift. Premium bonds allow you to deposit up to £50,000, compared to the Junior ISAs limit of £9,000. Premium bonds have often proved popular due to the element of ‘winning’, the ‘winning’ element, is the accrual of interest. And, as Martin Lewis points out nicely here the average rate of ‘winning’ is 1% but, with average luck, most investors won’t earn that. Check out our FAQs on how investing in a Junior ISA from the Children’s ISA really works and here to check out our indicative investment calculator. 


Junior SIPP

A Junior Self-Invested Personal Pension is otherwise known as Junior SIPP, (or Child’s Pension) allows you to start a pension for your child. A parent or legal guardian who makes investment decisions until the child turns 18 years old manages it. You can pay in a maximum deposit of £2,880 per year currently. With 20% of tax relief added this figure will grow to £3,600. A Junior SIPP will be converted into a personal pension plan when the child reaches adulthood and the funds will be accessible when they turn 55 (57 by 2028). 

We hope this helps to illustrate some of the saving options open to you for your little one. For more information on the Junior ISAs we offer please do get in touch. 

*https://www.moneysavingexpert.com/news/2020/09/premium-bond-prize-rate-to-be-slashed-to-1-/

© The Children’s ISA Ltd 2021. All rights reserved.

The website and the information contained therein should not be regarded as an offer or solicitation to conduct investment business in any jurisdiction other than the UK. Past performance is not necessarily a guide to future performance and the value of your investment may fall as well as rise, and any income received in the form of dividends may fluctuate. You may not get back the full amount when the account is closed. If paying regular monthly contributions please bear in mind that if contributions are not maintained you will be less likely to achieve the investment amount that was originally projected.

The information on this website is not advice, it is provided solely to enable you to make your own investment decisions. The investments and /or investment services referred to may not be suitable for all investors.

The Children’s ISA Limited is authorised and regulated by the Financial Conduct Authority. (FCA No: 563043)
The Children’s ISA Limited is a company registered in England and Wales. Registered Company Number: 07486015

Registered Office: 1 Lowry Plaza, The Quays Manchester, M50 3UB.
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