Cash ISA or Junior ISA

[Hackney]

I want to put some money away for when the as yet unborn Hackney Jnr turns 18.
I'd originally looked at a cash ISA - I'm not looking at snaffling loads away, £50-£100 per month - but then spotted Junior ISAs which are targeted at people like me. However comparison sites actually can't compare them because they're investments so I'm comparing companies I've not heard of based on their website rather than data. Companies like Scottish Friendly, Family Investments and Hanrgreaves Lansdown to pluck a couple from Moneysupermarket.

On the other hand I can get almost 3% for a normal cash ISA, and by the look of it I (rather than Jnr have the access, so I could change my mind at a later date)

Any had / have a Junior ISA?
Any advice on which to choose, or other options?

Cheers

[C0ffin D0dger]

Be aware that Junior ISAs are opened in you child's name and the money that goes into it is legally theirs although held in trust until they're adults (18). Once they've reached this ripe old age the money is theirs to do what they please with. Now if you've bought your kid up well and they have a sense of financial responsibility they'll be sensible with the money and put it towards their education, first house, etc. Alternatively they can piss it up against a wall

Personally I wouldn't bother unless you've exhausted all the tax free savings that your can have in your own name first, now upto £15k a year in a ISA/NISA. Sure save for your kids future but do it in your own name and then you have control over it. Could also be useful in an emergency for example if you wanted to pay for some private healthcare treatment for one of your kids. You couldn't do that it the money is trapped in a Junior ISA.

[mfmman]

Just had an almost identical situation although a small lump sum rather than monthly savings

Junior ISAs are limited to £4k which just ruled them out and in any event we found Halifax Young Saver pays 3% which no junior targeted ISA beats for instant access (that I could find anyway). Complete an IR85 form for the interest to be paid gross if appropriate and away you go


Just noted you said 'as yet unborn'. The suggestion above would only be allowed when they are born

Edited by mfmman on Wednesday 24th September 17:56

[Trax]

The Junior ISA we did for our daughter last year was with Halifax, pays 6% interest, which I think was the best at the time by a large margin.

The person applying had to have a cash ISA with Halifax themselves for the 6 % to apply though.

[SunsetZed]

Trax said:

The Junior ISA we did for our daughter last year was with Halifax, pays 6% interest, which I think was the best at the time by a large margin.

The person applying had to have a cash ISA with Halifax themselves for the 6 % to apply though.

Don't know if it's still available but we took a similar account with Halifax which was not a junior ISA but a savings account also paying 6% but with a paying in limit of £100 p/m which sounds like it may meet your needs (if it still exists).

The reason we took this over the JISA was because you can close this and take the money out / transfer it prior to the child reaching 18 which isn't the case with the JISA and interest on child savings is tax free anyway (assuming they don't have an income of more than 10k p/a!)

[BoRED S2upid]

SunsetZed said:

Don't know if it's still available but we took a similar account with Halifax which was not a junior ISA but a savings account also paying 6% but with a paying in limit of £100 p/m which sounds like it may meet your needs (if it still exists).

The reason we took this over the JISA was because you can close this and take the money out / transfer it prior to the child reaching 18 which isn't the case with the JISA and interest on child savings is tax free anyway (assuming they don't have an income of more than 10k p/a!)

You can still get 6% with Halifax as long as one parent has an ISA themselves but they can't get access until they are 18 which is what we wanted.

[megaphone]

I'd be more inclined to pay the £50-£100 a month off your mortgage (if you have one), get it out of the way so you're in decent financial health when the child actually needs money. Or stick the money in a cautious stocks & shares ISA which, long term, should easily beat 6%. Or start them a Junior SIPP, that way they can't spunk the money until they're 55, plus your investment gets full tax 'relief'.

[SunsetZed]

megaphone said:

I'd be more inclined to pay the £50-£100 a month off your mortgage (if you have one), get it out of the way so you're in decent financial health when the child actually needs money. Or stick the money in a cautious stocks & shares ISA which, long term, should easily beat 6%. Or start them a Junior SIPP, that way they can't spunk the money until they're 55, plus your investment gets full tax 'relief'.

We were going to do that, our mortgage is nowhere near 6% though so it made more sense to save it. The problem I have with junior SIPP's is that the money will benefit them more in the short term and it won't be 55, it's going up to 57 in 2028 and then it will be raised again in line with pension age so likely it won't be accessible until they're in their 60's. You don't have to tell them about the account when they reach 18...

[Ginge R]

We spoke about Bonds here earlier. You can invest money into an investment bond and when they need it (18 years time, Uni, for instance), you can allocate them segments. The money is taxed at *their* marginal rate, not yours. Not saying it's the perfect or best solution, just a possible solution to be considered as possibly, part of the picture.