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Saving for your child’s future?

Saving for your child’s future?

Category: Savings

Updated: 05/09/2016
First Published: 05/09/2016

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.


AER


Details

Coventry bs
Junior Cash ISA (1)


3.25% AER

  • Can be opened until the age of 17
  • Variable rate account
  • £1 minimum deposit
  • Further additions and transfers from other JISA providers allowed
  • Accepts transfers from child trust funds
  • No access to funds until the child turns 18
  • No penalty for transfers to another account
  • Account can be managed in branch, by post or by phone
  • Interest paid yearly and must be compounded


AER


Details

Mansfield bs
Cash Junior ISA (1st Issue)


3.05% AER

  • Can be opened until the age of 17 (children aged 16/17 can open the account themselves)
  • Variable rate account
  • £1 minimum deposit
  • Further additions and transfers from other cash JISAs allowed (not stocks & shares)
  • Accepts transfers from child trust funds, but only from residents of Nottinghamshire, Derbyshire or South Yorkshire, or existing customers with three years' membership
  • No access to funds until the child turns 18
  • No penalty for transfers to another account
  • Account can be managed in branch or by post
  • Interest paid yearly and must be compounded


AER


Details

Nationwide BS
Smart Junior ISA


3.00% AER

  • Can be opened until the age of 17
  • Variable rate account
  • £1 minimum deposit
  • Further additions and transfers from other cash JISAs allowed (not stocks & shares)
  • No access to funds until the child turns 18
  • No penalty for transfers to another account
  • Account can be applied for in branch, by post or online, and then managed by post, online or mobile app
  • Interest paid yearly and must be compounded


AER


Details

Halifax
Junior Cash ISA (Standard)


3.00% AER

  • Can be opened until the age of 15
  • Variable rate account
  • £1 minimum deposit
  • Further additions and transfers from other JISA providers allowed
  • No access to funds until the child turns 18
  • No penalty for transfers to another account
  • Account can be opened in branch or online before becoming branch-based
  • Interest paid yearly and must be compounded


AER


Details

TSB
Junior Cash ISA


3.00% AER

  • Can be opened until the age of 17
  • Variable rate account
  • £1 minimum deposit
  • Further additions and transfers from other JISA providers allowed
  • No access to funds until the child turns 18
  • No penalty for transfers to another account
  • Branch-based account
  • Interest paid on anniversary and must be compounded

What next?

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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