What is a Junior ISA?
When it comes to your children, there are several available options to choose from in order to prepare a nest egg for their future, whatever that future may look like. And if you’ve been looking into ways to provide financial support and stability for your children, you’ve already most likely heard of a Junior ISA.
While terms like Junior ISA and junior stocks and shares ISA may sound complex, they aren’t that much different from an adult ISA. However, it’s important to know more about just what they can offer for your kids so that you can make the best decisions possible.
Below are some of the key benefits of obtaining one of Wealthify’s award-winning Junior ISAs.
The Junior ISA explained
A Junior ISA is a tax-savvy ISA that allows you to save up to £9,000 annually for your child each year. This gives you the opportunity to gain long-term savings for your kids
without having to pay additional tax on the interest that it gains.
A Junior ISA tends to fall into two potential categories – a Junior ISA and a Junior Stocks and Shares ISA. With the stocks and shares option, your contributions to the ISA are invested in the stock market.
While the earning potential of stocks and shares ISAs increases, so do the potential risks. So when you’re looking at the different types of savings options for your children, be sure to find a reputable company like Wealthify that understands the market and your specific needs.
You also have the option to obtain both a Junior ISA as well as a Junior Stocks and Shares ISA, as long as you don’t exceed the £9,000 contributions limit across both ISAs during each tax year.
The money belongs to your child – not you
It’s important to understand that a Junior ISA will eventually be given over to your child. Any monies obtained and put into it will belong to them, and they can do what they wish with the money inside of that ISA.
Access isn’t granted until they turn 18 years old
However, access to the actual funds won’t be given to your child until they reach the age of 18 years old.
Others can contribute to a Junior ISA
Friends and members of the family can add to the ISA over the years, which relieves the burden of one person being responsible for the payments into it, while also giving your child a thoughtful gift from the entire family.
Invest in the future of your children
After your child turns 18, the accumulated funds within the Junior ISA can help them to get the best start in life possible. Whether that’s a deposit on a home, help with university fees, or a trip around the world.
The best ways to invest in the future of your children are through avenues that show them the benefits of savings and planning ahead. Once they’ve seen it, they’ll be keen to do it themselves and begin to save independently to achieve their other goals.