Are Junior ISAs worth it?

If you’re looking for a long-term investment for your child, the benefits of a Junior ISA could make it a great option. It’s a tax-free way to save or invest money for your child’s future until they turn 18. If you’re asking yourself whether Junior ISAs are worth it, this guide can help you decide if it’s the right option for you and your child.

What is a Junior ISA?

A Junior Individual Savings Account, also known as a Junior ISA or child ISA, is a long-term savings or investment account that lets parents or legal guardians save for their child’s future without paying income tax or Capital Gains tax on the returns. 

When the child turns 18, they get the money as a tax-free lump sum. They can use it for anything they like, such as:

• University or college fees
• A deposit for a house
• Their first car
• Further savings or investments

Who can open a Junior ISA?

To open a Junior ISA for a child, you must be their parent or legal guardian.

Once the account is open, anyone can pay into it. This means friends and other family members, like grandparents, can help save for your child’s future.

At Shepherds Friendly, you can add money with a one-off payment of £100 or more, or you can set up a monthly Direct Debit from just £10.

Cash vs Stocks and Shares Junior ISAs

There are two types of Junior ISA accounts:

• Cash Junior ISA: This is like a normal savings account where you earn interest. It’s low-risk, and you won’t get back less than you put in.
• Stocks and shares Junior ISA: This type of ISA invests your money in the stock market. It has more risk, but it could grow your money more over the long term.

Our Junior ISA is a stocks and shares ISA. It aims to give you better returns than a cash ISA or a normal savings account . If you leave the money invested with us, we guarantee that your child receives all the premiums you paid in, plus any bonuses.

How much can you save in a Junior ISA?

For the 2024/25 tax year, you can save up to £9,000 in a Junior ISA. Make sure you check the up to date figures in our annual ISA allowance guide for children.

You can put the whole amount into a cash Junior ISA, a stocks and shares Junior ISA, or split it between both.

Is a Junior ISA right for me?

A Junior ISA is a great way to save for your child, but there are a few things to think about:

• The money is locked away: No money can be taken out until your child turns 18.
• It’s your child’s money: When they turn 18, the money belongs to them, and they can decide how to use it.
• Investments can go up or down: If you choose a stocks and shares ISA, the value of your investment could fall, and you might get back less than you put in.

A Junior ISA is a good idea if you want to put money away for your child’s future and you want an easy way for friends and family to save for them too.

Why choose a Shepherds Friendly Junior ISA?

We offer a Stocks and Shares based Junior ISA to help you save for your child’s future.

Here are some of the benefits:

• Start saving from £10 a month: You can save up to the full £9,000 allowance each year.
• We accept payments from anyone: Family and friends can all contribute. It’s a great way for grandparents to save and gift money.
• We aim to pay a quarterly bonus: We have paid regular bonuses since this product launched 10 years ago. But please note, this depends on market performance and isn’t guaranteed. 
• Your money is invested for you: Our fund managers look after your investment in the Multi-Asset Strategies Fund (MAST).
• You won’t pay tax: All the money your child gets when they turn 18 is tax efficient.
• Manage your plan online, through our app, or with our help: You can pause, top up or change your payments at any time.

When your child’s Junior ISA matures on their 18th birthday, we guarantee that your child will receive all the money paid into the plan, plus any bonuses.

Our Junior ISA invests your money responsibly in a medium-low risk fund across stocks and shares, equities, bonds and property.

It’s easy to open a Junior ISA with us. You can apply online in minutes.

Find out more about how Junior ISAs work and if they’re worth it in this video:

View video transcript

A Junior ISA (or a JISA) is a tax-efficient individual savings account made for children, which allows you to invest towards a cash lump sum for your child. As you won’t be taxed on any returns on the money you invest, you can give your child they ultimate tax-free cash gift when they turn 18 years old.

A parent or guardian can set up a Junior ISA and invest towards their child’s future firsts, whether it’s their first car, a housing deposit, or university education. In addition, once you’ve opened a plan, you can manage all of your child’s savings online, such as topping up or adjusting how much you want to invest. Friends and family can pay in too, making a Junior ISA an ideal way for relatives to gift money to your child.

From just £10 a month, or with a one-off payment from £100, you can open a plan for your child and start saving for their future. The Junior ISA savings limit is decided by the UK government, and you can invest up to this amount each new tax year.

With our Junior ISA, your money is invested into a With-Profits fund, which is a ready-made fund made up of a variety of assets, which are actively managed by fund managers who monitor the market to ensure your money is protected from market volatility and your child gets the most out their Junior ISA.

We aim to pay returns on your child’s savings in the form of bonuses paid directly into their plan. As our main aim is to pay bonuses consistently in the longer term, when the market has performed well, we may hold back some of the returns gained so we can still aim to pay bonuses when the market performs poorly.

The effect of this is known as “smoothing” as it leads to a smoother overall investment journey where the daily ups and downs in the market are levelled out.

In fact, since the launch of our Junior ISA in 2011, we’ve been able to pay bonuses consistently, and we continue to be trusted by parents to grow their children’s investment in the long term.

As with any investment, the value of the investment in your child’s Junior ISA can rise and fall, depending on market conditions; however, our premium guarantee means that, if you remain invested with us until your child turns 18, you are guaranteed to receive all of the money you’ve paid into the plan, plus any bonuses.

You can relax knowing that every single penny will go back to your child and help towards their future.

What if my child already has a Child Trust Fund?

If your child has a Child Trust Fund that hasn’t matured, you can transfer it to a Shepherds Friendly Junior ISA.

Be sure to read through our Important Information Guides for all information about our Junior ISA. Remember that when you invest, your capital is at risk.