Junior ISA - a year on
As the Junior ISA reaches its first anniversary Guy Knight, sales and marketing director at The Share Centre, urges parents to recognise the benefits of investing for young people.
"Despite the current levels of uncertainty around the world, the stock market could still provide the best returns when investing for young people. The investment period could span up to 18 years and data shows that, over the long term, shares almost always produce a better return than cash savings accounts. The key is to achieve a good balance of growth and risk.
"We have seen far fewer people investing in a Junior ISA than we did in Child Trust Funds. Although this may be down to the lack of Government contribution, the average value of a Junior ISA at The Share Centre is 184% higher than that of a CTF. Junior ISAs have a role in developing financial capability in young people and it is important we remind parents of the benefits they can provide.
"The annual subscription limit is £3,600 per annum and the investments will be locked in until the age of 18. As the Junior ISA rolls into an adult ISA at the age of 18, it helps build familiarisation with the benefits of investment and financial house-keeping at an early age, setting up young adults with financial knowledge for life. It can help young people fund the important milestones in life such as contributing to student fees or a deposit for first-time house buyers.
"Many won't know where to begin because the list of options can seem infinite. The Share Centre offers three types of Stocks and Shares Junior ISA. A Ready-made Junior ISA catering for those who are unsure where to invest or those that don't want to actively manage their ISA. A Funds Junior ISA is the preferred option for those who wish to invest in funds only (Unit Trusts & OEICs). Lastly, a flexible DIY Junior ISA which makes it easy to purchase a wide range of Junior ISA eligible investments, including stocks and shares, funds, investment trusts, gilts, bonds and exchange traded products (ETFs and ETCs)."