We all want to do the best we can for our children, and that often involves thinking on a long-term basis rather than focusing on the here and now. Indeed, saving for your child's future has the potential to transform their later years, and it needn't cost a fortune to get started.
Little and often
As is often the case when it comes to saving, little and often is the order of the day – and it can be the perfect solution if you want to build your child a nest egg for when they reach adulthood. That way, you needn't worry about having to siphon off huge amounts of money into a children's savings account or junior ISA (JISA), but can be safe in the knowledge that years of regular saving and compound interest will add up to a hefty sum when they're ready to use it.
It's worth pointing out the difference between a traditional children's savings account and a JISA. With the former you'll often have few restrictions when it comes to the amount you can invest and how you can access the money, whereas with the latter you're restricted to investing up to the maximum annual JISA allowance (which for the current tax year is £4,080) and your child won't be able to withdraw the funds until they turn 18.
However, it's for this reason that JISAs are often preferred as a long-term savings vehicle, as the funds saved can only be used when the child reaches adulthood. It's also why many parents like to opt for a combination of both types of account – they'll have the JISA that they can save into for 18 years, while a children's savings account could be opened with the child for pocket money saving and smaller treats. This way, they'll be teaching their child the importance of long-term money management, as well as saving to reach shorter-term goals.
For some parents, it may also be worth thinking about stocks & shares JISAs as well as their cash counterparts. As with the adult version, a stocks & shares JISA means that any funds held are actively invested in the stock market rather than being kept as cash, which can offer the potential for far higher returns. However, this also makes this form of saving far riskier, so it should only be considered by those comfortable with the extra level of risk.
Top junior ISAs
Opting for a cash-based account will probably be preferable for the majority of parents, and given that we're talking about long-term saving, a junior ISA should ideally be the first port of call. So, we thought we'd take a look at the top JISAs that could help give your child the best possible start to adulthood.
Coventry bs Junior Cash ISA (1)
Mansfield bs Cash Junior ISA (1st Issue)
Nationwide BS Smart Junior ISA
Halifax Junior Cash ISA (Standard)
TSB Junior Cash ISA
Find out more about junior ISAs and take a closer look at the top deals
Want to focus on short-term saving as well as the long-term? Check out the top children's savings accounts. It could be a great way to get your child into the savings habit, too.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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