My kids are quite young but I’m conscious that time is ticking away.
One day they might want to go to university or travel for a bit.
And I want to give them a helping hand as much as I can so I opened a Junior ISA for each of them.
It’s good that grandparents and other family members can also contribute if they want to.
Child Trust Fund
We were lucky enough that our kids were born during the time that Child Trust Funds (CTF) were still being set up.
It meant that they received a voucher for £250 each when they were born to set up a CTF at a provider of our choice.
With my son’s account we set up a savings account but for my daughter we set up a stakeholder account.
Originally, the kids would also have received a further payment when they reached age 7.
Although CTFs were scrapped well before that would have happened.
Averse To Risk
With my son’s CTF we set it up in cash because we wanted to ensure he wouldn’t lose any money.
Whereas with my daughter we were a little more ambitious and set it up as a stakeholder account.
It holds money in stocks and shares but moves to less risky investments the closer she gets to 18.
Guess which grew the most? My daughter’s.
In fact recently the interest rate was so low on my son’s CTF that my daughter’s had caught up and was almost the same value.
That’s a poor state of affairs when his had two years extra growth so we decided it was time to do something about it.
With CTFs being phased out in 2011, we decided it was about time to see what else is available.
Switching To Junior ISAs
There was really no point in switching my son’s CTF to another cash account because interest rates are so low.
My daughter’s being a stakeholder one, I wasn’t sure what to do with initially. But either way, the cash account had to go!
Both of their accounts are with the same provider so my starting point was to look at their Junior ISA.
You can’t get the stakeholder option with an ISA but apart from that they offer much the same stocks and shares account.
With the past returns being higher than the CTF, I agreed with my wife that we’d switch both without delay.
As we’re with OneFamily, who are an award winning Junior ISA provider, I decided not to research any others until the following tax year.
Switching elsewhere may have incurred additional costs so I want to see how it goes first.
Opening a bank account for the kids to put their pocket money into is something for the future.
At the moment with interest rates being so low we just keep their pocket money in our account.
We give them virtual money using YNAB instead of having loads of change lying around.
When they want to spend it, they ask us how much pocket money they have and we tell them.
I spoke to the kids when I set their new Junior ISAs up to explain about saving money.
My son definitely understood but I know my daughter would rather spend the money!
That’s why it’s good that we’re putting away some money each month for their future.
Is Giving Them Money In Their Own Name A Good Thing?
The thing about a Junior ISA is that it really belongs to your kids.
Once you make a payment into it, you can’t take it out again and neither can they until they are 18.
When they reach 18 they can do whatever they want with it. Some people might not be comfortable with that.
If they want to blow the lot on a holiday or a car or whatever then they can.
So any hopes that you had that they might want to use it to further their education could be dashed.
That’s the risk you take. You’re not in control. And if that’s not something you like then an ISA is not the way to go.
Did You Take Out An ISA For Your Kids?
What do you think of Junior ISA accounts? Do you save something for your kids in a bank account instead?