Designed as a mini-extension of the existing and very popular adult Isa, the junior version allows parents, grandparents and even family friends to invest cash on behalf of children, or those under 18. This investment can be in stocks and shares or in cash.
Whilst launched, with good intentions, to replace the Child Trust Fund (CTF) the take-up of Junior Isa’s has been disappointing. The HM Revenue & Customs (HMRC) reports that only 72,000 such accounts were opened between November 1st 2011 and April 5th 2012, with investment funds therein totaling £116m. This is a tiny proportion of the eligible number of such children – approximately six million – or less than 2%.
Given that there were 5,500,000 CTF’s opened by April 2011 this looks disappointing, however, at the introduction of CTF’s the then government donated a voucher worth £250 to each child, but since then only 18% of such funds has seen any further investment.
These additional investments totalled £325m, which is only an average of £321 per account. Compare this to the average held in the newer Junior Isa which is £1,614.
So whilst they appear to be less popular, those parents, grandparents and other benefactors are utilising the vehicle to better effect.
Research conducted by Family Investments reported that 92% of parents and children aged under 18 said whilst they thought that it was important to save on behalf of their children 56% of those canvassed had not even heard of a Junior ISA.
Given the tumultuous economic climate we are living through, the need for long-term saving for our off-spring has never been greater.
We have heard much of the “bank of mum and dad’” having to be utilised in later life to fund a child’s education, work placement ,or eventual house purchase, what better way to cushion the shock of this requirement by starting such a Junior Isa now.
Please contact us to see how we can advise you on the best way forward when investing tax-efficiently in your children, grandchildren or family.
Professional advice is essential
When it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do, contact Robert Bruce Associates for individual assistance.
NOTHING IN THIS ARTICLE SHOULD BE SEEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.