is there any reason to get a junior isa?

[petemurphy]

so its the last day and i started an application for a junior isa ages ago but stopped on researching it as there seems no reason to get one.

I have about 20k that is technically my daughters ( shes 10 ).

is there any reason to use this years c5k allowance in a junior isa?

from what i understand the only reason is to lock the money away until she is 18 as she wouldnt pay tax on those sort of amounts?

happy to be told im wrong if so let me know by tonight!

thanks

[Fonzey]

Interest rates are usually much better than you can get on a normal cash ISA or savings account. I think our JISA is at 3.25% vs 1.3% on my adult ISA (which just dropped to 0.65...)

If you're putting money away for a long time (15-18 years or whatever) then it seems to be the only reliable way to beat inflation... but then again, let's see what inflation looks like in a year or so!

[R33FAL]

In my view the only real reason to invest in a Junior ISA is equities.

You have a long enough time frame and can build up a reasonable sum for her.

I might be wrong but its probably reasonable to assume that equities will outperform cash interest from here over the next 10 yrs.

[GingerMunky]

petemurphy said:

so its the last day and i started an application for a junior isa ages ago but stopped on researching it as there seems no reason to get one.

I have about 20k that is technically my daughters ( shes 10 ).

is there any reason to use this years c5k allowance in a junior isa?

from what i understand the only reason is to lock the money away until she is 18 as she wouldnt pay tax on those sort of amounts?

happy to be told im wrong if so let me know by tonight!

thanks

The JISA is useful over a longer period, which suits equity investments. Buying some dividend paying shares and allowing the dividends to accrue and be reinvested in the JISA would be worth considering. Particularly as the markets are very low at the moment, so a good time to buy in, and should have recovered by 2028 when your daughter will be able to access the money. Tricky to call the bottom of the market, which maybe another month or so until the full global impact of the virus is known.

[Aluxo]

Agree with R33FAL. I opened JISA earlier this week for both kids and went for equities as well. Now feels like a good time to jump in with a long-term perspective.

[I 8 a 4RE]

I never understood the appeal of the JISA.

In the USA one can open a 529 account which allows the tax free investment to be spent on education at any age (but nothing else). A combination of the two would work best.

My view is; I will pay for your private schools and uni for which I have budgeted roughly £250k per child (based on current fees, obviously would change if they go to an American Ivy League school).
If that does not set you up to earn enough to fuel your own ISA ... we have bigger problems!!

[JulianPH]

Yes.

You say it is "technically" your daughter's, but this suggests it is not in her name and therefore you have to pay the tax on this.

Even if it is her name, if the income from any gift made to them is more that £100 a year then all of it is taxed at your personal rate (this is per parent who made the investment/gift).

You can get round this using a Bare Trust, but a Junior ISA has other advantages.

For a start it doesn't even need declaring on your tax return(s) and when they become 18 it automatically becomes an adult ISA.

Remember too that the annual allowance for a JISA goes up to £9,000 tomorrow, so you can get the best part of £14k in over 2 days.

If you are talking about a cash JISA though, there is little point.

[petemurphy]

thanks all will leave it till 11.55 to decide

[JulianPH]

petemurphy said:

thanks all will leave it till 11.55 to decide

Well, there is no point in waiting until the last minute!