Casting the Junior ISA net more widely

Nearly half of adults in Britain (43%) would contribute to a Junior ISA for the child of a family member or friend, with the average contribution being £542 per year from those that stated an amount.

The study undertaken by J.P. Morgan Asset Management's Investment Trust group highlighted that a quarter of people (23%) would contribute to a relative or friend's child's Junior ISA as they felt it provided a better alternative to buying the child a present. In addition, 8% think it is their responsibility to help the children of relatives or friends start saving for the future and a further 13% felt it provided a tax efficient way to save for that child.

The study found that, of those who would contribute to a relative or close friend's child's Junior ISA, 59% would contribute under £500 per year, while 15% would contribute between £501 and £1000 per year. In order to do so however, over half (53%) would have to make cutbacks of some sort. Of those, 33% state that the impact on their monthly finances would be minimal but they would need to cut back in some way, while a further 20% state it would have a major impact and they would need to cut back significantly.

David Barron, Head of Investment Trusts at J.P. Morgan Asset Management, said, "With a wider network of family and friends realising the importance of saving for a child's future in a tax efficient way, these results further confirm the benefits and advantages people are seeing with the newly launched Junior ISAs. It is interesting to see that cutbacks to monthly outgoings do not seem to deter people who clearly want to help save for a relative or friend's child in the future.

"It has never been more important for parents to start planning towards their child's future. With increasing costs, such as the rise in tuition fees at university, planning ahead and building a savings pot will go a long way to giving a child a positive step into adulthood. Additionally, with the base rate coming up to its third year of being held at 0.5%, impacting significantly on the cash savings rates available, a stocks and shares Junior ISA could provide a better long term return. Our calculations show that 18 years of investing the average contribution pot of £542 from friends and family every year, assuming a 5% return per annum, would mean an additional £16,552 to any contributions from a parent."

J.P. Morgan Asset Management Junior ISA

J.P. Morgan Asset Management will be offering a Junior ISA in the first quarter of 2012. The Junior ISA will be available on J.P. Morgan Asset Management's direct platform, JPMorgan WealthManager+, along with ISAs, SIPPs and investment accounts, which can invest in funds offered by both J.P. Morgan Asset Management and 28 other fund providers.