Junior ISA – Should you opt for Cash or Stocks and Shares ?
Junior Individual Savings Accounts (JISAs) are a great way to build up savings tax-efficiently for a child under 18 living in the UK. Your child can have a Junior cash ISA, a Junior stocks and shares ISA or a mixture of both and save up to a total of £4,080 in the 2016-17 tax year.
When it comes to choosing the right type of ISA account for their children, parents often ask how to make the choice between cash or stocks and shares.
Cash is solid and reliable, and with a cash ISA you are guaranteed to get back all the money you have put in – but with interest rates continuing to remain very low, there is a risk that inflation, which has risen in the last few months, will erode the value of the money saved over time. Some financial commentators are predicting that inflation could rise to 3% in 2017. If it does, to keep up with this rise in the cost of living the cash ISA has to match this rate.
STOCKS AND SHARES
If you are able to lock your money away for a reasonable amount of time – a minimum of five years – it might be better to invest in stocks and shares which historically have offered a better return. Unlike cash savings, money invested in stocks and shares rises and falls in line with what is happening in financial markets here and abroad. So the value of your investment can go up and down.
With a Junior ISA you could be looking at a time horizon of as much as 18 years. By saving into a Junior ISA on a regular monthly basis, there is the opportunity to smooth out the peaks and troughs in the stock market. If the stock market falls, you could buy more shares at a cheaper price.
Logic Wealth Planning can give you help and advice on the various funds available and help you make the right choice for your child.
As one of the leading IFA practices in Greater Manchester, Logic Wealth Planning has a team of experienced Financial Advisors specialising in Wealth Management. Working closely with clients in the Heywood, Rochdale, Bury and surrounding areas across the North West, we believe that however modest your income may be, when it comes to Pensions, Savings and Investments we provide the best financial advice, ensuring that your money is working hard for you and allowing you to enjoy a comfortable lifestyle right through to and including your Retirement years. For your first meeting with us – entirely free and without obligation – please call us now on 0808 1234 321. We look forward to hearing from you.