For your children’s future
ISA’s have been around a while, and most doctors or dentists will utilise their annual allowance as a tax-free way to save. However, Junior ISAs, are often overlooked. A JISA can be a fantastic way to, slowly but surely, build a pot of funds for your children, that they can later add to when they start to earn their own income.
The benefits of ISA’s and JISA’s
The key benefit of ISA’s and JISA’s are that they are tax-free, in terms of income tax on any interest earned and in terms of capitals gains tax (CGT) on any gains they make.
With interest rates currently low for savers, maximising other benefits, such as the tax relief given on ISA’s and JISA’s, will make some difference to your return on investment (ROI) in the long-term.
Junior ISA’s – how they work
A JISA can be opened for your child from birth and the current annual limit for investment is £4,080. This is the amount you can invest on behalf of your child every year.
Investments, like a regular adult ISA, can be made into a Cash ISA, a Stocks and Shares ISA, or a combination of both. Which you choose will depend on your attitude to risk.
The funds building up in a JISA belong to your child, named on the account, although as a parent or guardian, you are able to manage the account until the child is 16 years of age.
Whilst the child can gain control at age 16, they can only access the funds at 18 years old. Therefore, JISA’s are excellent long-term investment plans.
5 reasons to save into a JISA
Children are expensive, there is no getting around that!
Perhaps though, by saving a little amount each month into a JISA, will help them, and you, when key milestones arise in their life’s.
Here are 5 reasons to save into a JISA:
(1) To pay for university fees
University now costs parents tens of thousands of pounds in tuition fees and living costs. Wouldn’t it be great to have a contribution to help out, if and when the time comes?
(2) Helping your child onto the property ladder
Who knows what will happen with house prices by the time your children are grown-up and wanting to fly the nest, however, having funds available for a deposit is highly likely to come in handy. Saving regularly into a JISA could be the step needed for your children to get onto the property ladder.
(3) Buying your child’s first set of wheels
There is a high chance that your child will want their independence at some point after leaving school. Parents can often find it tough to find the funds needed to buy another car, and indeed for driving lessons preceding. A JISA can help to fund an additional family car by spreading the cost over many years to be prepared.
(4) Paying for the big day
A wedding can be a very expensive day, but, perhaps one that you want to allow your child to enjoy and indulge. Modest or extravagant, savings into a JISA can contribute to the costs of the big day.
(5) To encourage a saving mentality
Whilst it is quite likely that one of the above four uses would appeal to a young adult, if not, they may just like to continue saving. Having a base amount in an account encourages further savings.