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Five years of JISA investing - almost £10,000 birthday boost since launch

26th October 2016 Print

With the Junior ISA celebrating its five year anniversary on 1 November 2016, Fidelity International highlights how investors could have helped their little one build up a savings pot of over £27,000 since its launch.

Figures from Fidelity International show that had you drip fed the full allowance each year into the savings vehicle since it was launched (a total of £18,713) and invested in the FTSE All Share, your child could be sitting on a savings pot worth £22,895. If on the other hand you had left the money sitting in cash this would be worth just 18,791 - a paltry £78 return on the initial investment over five years. 

If you had chosen to invest in an actively managed UK fund such as the Fidelity Special Situations Fund rather than just track the index, your child’s savings could now be worth £24,885. That’s a difference of nearly £2,000 more than had you chosen to follow the FTSE All Share index and more than £6,000 than had you left the money in cash.

For those who prefer a more diverse and global approach, a fund such as the Rathbone Global Opportunities might appeal. Had you set up a monthly savings plan and invested your full allowance, your child would now have savings worth £27,835 – a £4,940 difference compared to the returns from the FTSE All Share and over £9,000 more than leaving your money in cash.

Tom Stevenson, investment director for Personal Investing at Fidelity International, comments: “Since the Junior ISA was launched five years ago, nearly three quarters of a million accounts have been opened and it’s easy to see why they have proven to be so popular. Every parent wants to give their children a good start in life and the JISA is a great way for parents to build a valuable nest egg for their children

“Rather than stumping up a large lump sum each year, an easier and more sensible way of saving might be to drip feed your money each month into a JISA. As our analysis shows, even a relatively modest amount of money invested regularly can build into a sizeable sum over time. Remember, the sooner you start saving, the longer your investment has to grow and the longer you’ll benefit from the magic of compounding - the effect of generating earnings on top of previous earnings.

“However, as our figures show, to stand any chance of building up a sizeable savings pot in this rising inflation, ultra-low interest rate environment, you really need to be looking further up the risk spectrum, investing in stocks and shares rather than just sitting in cash.”