The holiday season may be over, but it’s not too late to give a particularly special gift for your loved ones to ensure a prosperous 2025 and beyond: financial peace of mind. A Junior Individual Savings Account (JISA) can help you do just that. Here’s how:
What is a JISA?
It may not be as exciting as a new bike or games console, but JISAs can be a game-changer for your child’s future financial wellbeing. Set up by a parent or guardian, JISAs offer a tax-efficient way to save and invest for your child’s future. The funds are locked until the child turns 18, at which point they gain full access to the investment.
What JISA options are there?
There are two types of JISAs:
Cash JISA: Cash is simply added into the JISA, which may prove simpler, but will generally offer lower returns, and inflation can erode the purchasing power of the money saved.
Stocks & Shares JISA: Funds are invested in the stock market, offering the potential for higher returns over the long-term.
For long-term growth, Stocks & Shares JISAs have regularly outperformed Cash JISAs. Here’s why:
Higher returns: historically, the stock market has consistently delivered higher returns than cash savings over the long-term. This means your child’s savings could grow significantly more in a Stocks & Shares JISA compared to a Cash JISA.
Time advantage: you have until your child turns 18 to invest in your JISA. This ample time allows you to ride out market fluctuations and build a substantial savings pot. Having time on your side helps you to look through short-term market fluctuations and focus on building wealth for the long-term.
Compounding growth: returns on your investments generate their own returns, leading to exponential growth. Invest £9,000 annually (the current JISA allowance) with a 7% return, and you would reach over £300,000 in 18 years. The final amount is roughly double what you will have put in (£162,000) – so it’s worth starting early!
Beat inflation: stocks and shares have the potential to outpace inflation, ensuring that the purchasing power of your child’s savings is preserved. Cash savings lose value in real terms if interest rates are lower than inflation.
Education: once a child turns 18 they will not only have the money in the JISA, they will have also received an invaluable lesson in the benefits of investing that will stand them in good stead for the future.
Did You Know?
Research shows that teaching children about money from a young age can provide a significant positive impact on their future financial security. Get your kids involved in the JISA process to teach them the importance of investing
Interested?
Your financial planner can help you set up a JISA that works for both you and your loved ones. Reach out to them to find out more.
Investing in a JISA is a powerful way to secure your child’s or grandchild’s financial future. Among the options, a Stocks & Shares JISA stands out for its potential to deliver higher returns over the long term, thanks to the advantages of compounding growth and the ability to outpace inflation. Consider giving the gift of financial security with a JISA – a gift that truly keeps on giving!