1st February 2022

The benefits of a Junior ISA

Starting to invest on behalf of your children as soon as you can is a smart move. By saving regularly on a child’s behalf, you will help to build a financial platform for them to access when they take their first steps into adulthood. With a Junior ISA,  as your child reaches adulthood, they will have full access to the savings to put towards their life goals — driving lessons, university fees or even a deposit for their first property. 

At the Children’s ISA, we pride ourselves on providing a transparent range of long term saving options to give you peace of mind. As a new parent, it can seem like there are a bewildering number of potential options out there. In this article, we want to examine the features and benefits of a Junior ISA against another popular option for children, Premium Bonds.

Junior ISA
This works just like a regular, adult, stocks and shares ISA and provides a long term investment vehicle. A huge bonus of a Junior ISA is that once the account is opened by the parents or guardians of the child, friends, family members and most importantly grandparents can pay in and contribute. When the child reaches 18 years of age, the account will automatically become an ISA, with the child in full control of the funds. A major plus of saving with a Junior ISA is that all money is tax-free, up to the annual limit. Allowing them to earn interest as the years pass by, with the Children’s ISA all of our accounts are managed online, so it is also a great option for saving time, and for those who are constantly on the go (like most busy parents and grandparents). 

Premium Bonds
Another popular option for parents, other than a long term savings vehicle like a Junior ISA, is taking a chance on Premium Bonds run by the government-sponsored bank National Savings & Investments. Parents, family and friends can buy bonds for children under the age of 16, currently, you can put in between £25 and £50,000 per child. This is more like a game with your money, there’s no interest, but you have a chance of scooping one of the three million-plus monthly tax-free prizes of between £25 and £1m. The vast majority are for the lesser amounts and the chance of winning any prize on each £1 bond is 34,500 to 1, you could be one of the lucky ones, but this is very much a game of chance. However, this is a strong option if you are looking at investing larger amounts simply because you have a greater chance of winning. Premium bonds allow you to deposit up to £50,000, compared to a Junior ISAs limit of £9,000.

We hope that helped provide comparisons, to help you make an informed saving decision. For more information on the Junior ISAs we offer please get in touch. 

© The Children’s ISA Ltd 2024. 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: Unit 2, Digital Park, Pacific Way, Salford Quays, M50 1DR