20th January 2023

The gift of saving with the Children’s ISA

The UK has a long-standing problem with saving money. According to the
Resolution Foundation, since 1980, the UK had the lowest savings rate of any G7
country in four out of five years. Unfortunately, it seems many people have
forgotten how to save and plan ahead for their future financial security.
A Junior ISA (Individual Savings Account) by the Children’s ISA, is a great way to
give an important gift to your child, the gift of learning to save. A Junior ISA can
lead to a nest egg that could help them in the future, especially when it comes to
one of the most important purchases they will ever make: buying a property.
Junior ISAs allow parents and guardians to save for their children in a tax-
efficient wrapper. Taxes are not paid on Junior ISAs (up to the annual limit) and
the money is locked away until the child turns 18.

Property prices have skyrocketed in the UK over the past 25 years and Junior
ISAs could provide a helping hand to enable your child to get onto the property
ladder in the future. A Junior ISA could also be used for other important
milestones such as funding university fees or buying their first car. Junior ISAs
are a great way to help your child plan and save for their future, whilst also
learning the importance of saving money.

So how does a Junior ISA work? A Junior ISA, by the Children’s ISA is an
investment ISA. This means the Children’s ISA manages the funds on your child’s
behalf. Like all investments, the value of the funds can go up, as well, as down
but you can choose a level of risk that suits you. It’s important to remember that
a Junior ISA is a long-term investment and this means that the value of the fund
will compound over time, so the sooner you start investing, the more your child
could benefit in the future.

So what are the predictions for the UK property market? In the short term, it looks
likely house prices could fall slightly over the medium term but just like any
investment such as a Junior ISA or a pension, owning a home is a long-term
game.

How does a Junior ISA stack up against a savings account? Despite recent
interest rate rises UK high street banks seem less inclined to pass this hike on to savers. Junior Cash ISAs can offer a higher return than most savings accounts,
but over the long term and based on historical performance, Investment ISAs will
outpace cash over the long term.

In summary, Junior ISAs can be an important way to teach your children the
importance of saving, while also providing a nest egg for their future. Junior ISAs
can provide higher returns than many cash-based alternatives and have the
potential to outpace inflation over time. With a Junior ISA from the Children’s ISA,
you can start your child on a path to financial security while also teaching them
the importance of saving money. Compound interest is a fundamental concept
when it comes to Junior ISAs and it’s important to remember that the earlier you
start, the more your child will benefit in the future.

© 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

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