Hey all,
Quite new to the stocks and shares ISA and I’m looking at getting a junior ISA for both my kids
What are your thoughts on them? What’s the likelyness my savings will increase once my children get older
Could my savings decrease?
I have one for both of my daughters with Hargreaves Lansdown, which I opened when the second was born.
The whole amount is in Vanguard Life Strategy 100 which more-or-less represents buying a bit of every publicly traded company in the world proportionally and at a very low cost (0.22% a year to vanguard and 0.45% a year to HL)
In 2.5yrs it’s grown by 25%, but only because we have been in a period of strong economic growth worldwide which will in all likelihood correct at some point.
Historically, doing this has been the only sure-fire way to achieve real-terms growth but, of course, some catastrophic event could occur between now and when your kids reach 18 that means it will be worth less than you put in. If that happens though we’re likely to have bigger problems to worry about.
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I think they’re great. One consideration is that they are not your money any more as soon as it goes in - that money is your children’s to do with as they please when they are 18. Some people don’t like this - I figure if you’re unhappy with how your child spends that money at 18, you have bigger problems.
Could my savings decrease?
Yes in the short term, unlikely in the long term - most likely outcome is around 5% yearly growth compounded. Just set up a direct debit for a small monthly amount invested in some index tracker (like VUSA, VWRL, the vanguard tracker mentioned by Danny etc) and forget all about it till they are 17 or so then consider your options (you could at that stage start turning the investment into cash to insulate you from market fluctuations).
If you have spare money, also consider pensions for your kids! You’ll get tax relief on any money put in.
This article on the fidelity website covers the pros and cons of a S&S JISA pretty well.
The accounts itself are the easiest and simplest ways of putting some money aside for a little one that will always be saved for them, no matter what happens to you. Additionally they add in some nice flexibility in that anyone from the immediate family can contribute into them. Just like normal ISA’s they completely protect the money form TAX considerations.
Yes, the money isn’t yours and you cannot access it, but its also protected just for them when they turn 18.
As said above, long term investing generally always pays off in the long run, despite booms and busts.