Junior ISA
How to take care of their uni fees
before they can even spell "overdraft"
In a nutshell
01
Tuition fees and living costs mean your child could leave university with significant debts.
02
A Junior ISA (JISA) could help them with this problem before they even start work.
03
They don’t pay tax on growth, so they keep every penny their JISA earns.
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Watching a JISA grow is a great way to develop financial understanding.
Meet Annabelle
1
She was born just yesterday. Although her future’s bright, financially speaking her life is likely to be far more challenging than her parents’. Even with their help, property and university debts will be a stretch.
2
But she has something on her side that could transform her entire financial future: time.
3
By setting up a stocks and shares JISA for her now and investing the current maximum of £750 a month, with an assumed annual net return of 5.5%, she could have over £270K at her disposal when she’s 18*.
* Simulated past performance is not a reliable indicator of future performance. Predicted net returns are based on all-time performance of fully managed Nutmeg Portfolio 7. Calculations don’t take inflation into account.
In more detail
A Junior ISA (JISA) is a brilliant way to invest for a child’s future without having to pay tax on any growth.
Start your child on an investment journey by setting up a Nutmeg stocks and shares Junior ISA when they’re born, and by the time they’re 18 and can access the money it could be large enough to help cover their university tuition fees. Or buy a first car. Or put a deposit on a flat. Or fund a gap year. Whatever they want to do in life, a JISA can help make it happen.
With that power comes responsibility. Perhaps not surprisingly, only around 12%* of people would trust an 18 year old to spend a large lump sum wisely, so we encourage anyone setting up a Junior ISA to also think about helping the lucky recipient develop an appropriate level of financial literacy.
For example, it’s a good idea to encourage them to watch how it performs over the years via our easy-to-use app so they come to appreciate the power of compound growth (in other words, returns on returns).
That way when they do get their hands on the money they’ll be far more likely to reinvest it than fritter it away.
Once a JISA is up and running the child’s parents or guardians can put in money whenever they want up to the annual limit (currently £9,000). Remember, you’re not sharing your ISA allowance with your child; a JISA is theirs and theirs alone. You get to keep your full annual ISA allowance. Once the child turns 18, their JISA automatically transforms into an adult ISA.
Easy to set up, tax efficient and incredibly useful for life goals, a JISA really is a great way to give your child a flying start in life. To find out what all this could mean for you, get in touch. That’s what we’re here for.
* Populus conducted an online survey of 2,083 GB/UK adults between 29 November and 1 December 2019.
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