Junior Individual Savings Accounts (JISAs) are one of the most effective ways for parents – and other family members – to save for a child’s future. Starting to save early is key to maximising returns, but so is choosing where to invest your money.
To help you get started, we answer some of the key JISA questions. We also look at why investment trusts, which are designed to help investors share in the long-term growth potential of global stock markets, are worth considering for your child’s JISA.
What are the Junior ISA limits and allowances?
A JISA - like a standard ISA – is effectively a tax-efficient wrapper allowing you to invest up to £9,000 in 2022-23, either in cash or stocks and shares. This allowance is on top of your regular ISA savings allowance (£20,000). Remember, there is no capital gains tax (CGT) to pay on investment gains, and investment within the ISA wrapper can grow in a tax-efficient environment..
When can my child access their JISA?
Money invested in a JISA is locked away until a child’s 18th birthday, so these are ideal longer-term investment plans. For this reason, to get the most out of a Junior ISA (JISA), it’s best to start early and save on a regular basis. Not only will this help increase the value of your nest egg, it can also encourage good investment habits for both you and your child. The rewards may end up lasting a lot longer than the JISA itself.
How much do I need to open a JISA?
You don’t need to have a large lump sum or be especially wealthy to open a JISA. Most providers offer regular investment plans that can be opened from as little as £25 per month. Even relatively small amounts can build to a sizeable sum over long periods, particularly when compound returns are taken into account – in other words, getting returns on your investment returns. Regular savings plans also help smooth out stock market movements, which can be particularly helpful for those investing in more adventurous sectors, such as emerging markets.
Even relatively small amounts can build to a sizeable sum over long periods, particularly when compound returns are taken into account
Even relatively small amounts can build to a sizeable sum over long periods, particularly when compound returns are taken into account – in other words, getting returns on your investment returns. Regular savings plans also help smooth out stock-market movements; ideal for those investing in more adventurous sectors.
Who can contribute to a Junior ISA?
Parents are not the only ones who can save into a JISA. Grandparents, godparents and family friends can all contribute, provided the total invested does not exceed £0,000 in the 2022-23 tax year. These contributions do not affect the donor’s own ISA allowance.
Why should I consider investments trusts for my child’s JISA?
If you start saving into a JISA when your child is young, you’re looking at a 15-year-plus horizon. This timescale means you could think about a more adventurous investment strategy than simply saving into cash. Investing in stock markets via investment trusts, for example, involves risks including possible loss of capital and may be more volatile over shorter time frames but has the potential to deliver higher returns over the longer term by tapping into the growth of stocks and shares.
J.P. Morgan Asset Management offers a variety of investment trusts suitable for Junior ISA investment from blue-chip UK firms, to the best of small and medium-sized British enterprise, or even a carefully curated portfolio of innovative emerging market companies.
Find out more about J.P. Morgan’s range of investment trusts >